Lower Inflation Drives AUD Lower

The price of goods and services rose less than expected in the 12 months to March, meaning the Reserve Bank of Australia is likely to keep interest rates at their current low.

Inflation measured by the consumer price index (CPI) rose 2.9% in the year to March, the Australian Bureau of Statistics said on Wednesday, against expectations of 3.2%.

The lower figure also saw the Australian dollar fall sharply by half a US cent to US93.22 cents as investors retreated from expectations that the next RBA rate move would be upwards.

The ANZ chief economist, Ivan Colhoun, said the inflation figure would allow the RBA to keep the cash rate low.

“It was a good result. I think this will allow the RBA board to continue this very accommodative setting of monetary policy that it currently has for some time further.

“It’s consistent with the economy recovering slowly but not dramatically at this point in time.”

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza