Fears that the Bank of England would resume its programme of interest rate rises, bringing misery for homebuyers and businesses, receded yesterday after the City of London brushed aside the latest rise in inflation. The headline rate rose to 3.5 per cent from 3.3 per cent in July, in line with City expectations and driven by rising housing costs following recent interest rate rises, the Office for National Statistics said. The underlying rate dropped to 2.8 per cent from 3 per cent. The news was better than City forecasts of 2.9 per cent, but still above the Government's target of 2.5 per cent.