INSTANT VIEW - Analyst view following inflation rise

LONDON (Reuters) - Consumer price inflation hit a 16-year high of 5.2 percent in September, but Bank of England policymakers had anticipated the rise which is unlikely to stand in the way of further interest rate cuts.

The Bank said last week when it cut rates by 50 basis points to 4.5 percent that inflation would likely exceed 5 percent but said financial market turmoil had increased the downside risks to the economy and inflation.

ANALYST REACTION

ALAN CLARKE, BNP PARIBAS

"5.2 percent year-on-year is likely to represent the peak and the trend will be steadily down from here. Base effects, lower petrol and food prices will be key drags on overall inflation."

"What today's numbers demonstrated is that the sharp increase in costs over the last few quarters is still working through to underlying inflation. We expect this process to continue for at least another 6 months, before the effects of the economy slowing below potential have the opposite effect."

"Overall, this is unlikely to deter the MPC from cutting interest rates again next month. The MPC had expected 4.9 pct year-on-year on average for Q3 and what we actually got was 4.8 pct year-on-year. Moreover, the prospects for inflation over the medium term have diminished significantly in light of the worsening outlook for growth."

BRIAN HILLIARD, SOCIETE GENERALE

"The damage was done by utility prices with much bigger increase than in the previous month. The data was not available to the Bank of England for the meeting, but what is interesting is we had a very dovish speech yesterday from Andrew Sentance by which time he would have had the data."