What will rising inflation mean for interest rates in 2026. It has been announced that inflation rose to 3.4% in December up from 3.2% in November. A rise was expected due to seasonal pressure and slight rises in fuel costs but only to 3.3%. As it is expected to be a seasonal blip it will be interesting to see how the Bank of England reacts at the next interest rate review. If inflation stays above the banks 2% target, they will be reluctant to cut interest rates as regularly and speedily as us in the housing market may hope!