UK inflation stable as Bank of England ‘unlikely to unlock’ interest rate cut

The UK’s inflation rate has remained stable at 2.2% year-to-year, according to the Office for National Statistics.

The new data point is “unlikely to unlock any rate cut” at the Bank of England’s meeting on Sept. 19, a KPMG economist said. Most economists had already predicted the central bank will keep interest rates at 5% for now, as prices in the crucial services sector — 81% of the UK economy — remain well above headline inflation.

“Headline inflation is coming down because China is losing economic steam faster than it cares to admit and they’re inadvertently deflating the world, which is great for central banks,” an economist told CNBC, but that external force, rather than domestic changes, means more aggressive rate cuts would be “premature,” he added.