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.

Having all but tamed inflation, the Federal Reserve is poised to do something Wednesday it hasn’t done in more than four years: Cut its benchmark interest rate, a step that should lead to lower borrowing costs for consumers and businesses.

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 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.