Switzerland’s government slashed its inflation forecasts, a move in line with expectations that the central bank will cut interest rates again when officials meet next week.

"The Fed is more worried about the labor market and less concerned about inflation at this point," a Glenmede analyst said.

Inflation held steady at 2.2% in the year to August, despite a jump in the cost of flights. The rise in air fares was offset by lower fuel prices and prices in restaurants increasing more slowly, the Office for National Statistics (ONS) said.

The Bank of England on Thursday held interest rates steady, saying it most work to reach its goal of 2% inflation in a sustainable way.

The Bank of England kept interest rates at 5.0% on Thursday, saying it would be careful about future cuts, and also held off from running down its bond holdings at a faster pace, avoiding extra budget strains for finance minister Rachel Reeves.

The Bank of England has held interest rates at 5 per cent after inflation remained steady in August, but indicated it may lower borrowing costs again as soon as November. The Monetary Policy Committee’s eight-to-one decision on Thursday came after it cut borrowing costs by a quarter point at its meeting last month.

The U.S. central bank's decision to cut interest rates by half a percentage point leaves open the risk of a resurgence in inflation, a former Kansas City Federal Reserve president said on Thursday.

For more than two years, we've heard a steady drumbeat of news highlighting inflation and its impact on interest rates. The correlation seems clear, but the issue is actually more complex.

The Federal Reserve on Wednesday cut its benchmark interest rate by an unusually large half-point, a dramatic shift after more than two years of high rates that helped tame inflation but also made borrowing painfully expensive for American consumers.