Dollar rises on inflation data


stack,coins,gold,dollar,money,currency,dollarThe Australian dollar is being boosted by stronger than expected inflation figures that have all but closed the door on another cash rate cut.

At 0700 AEDT on Thursday, the Australian dollar was trading at 88.47 US cents, down from 88.59 cents on Wednesday.

The consumer price index rose 0.8 per cent in the December quarter, for an annual rate of 2.7 per cent.

Economists had expected a rise of 0.5 per cent for the quarter and 2.5 per cent for the year.

The higher than expected figure means further rate cuts from the Reserve Bank of Australia in the near term are highly unlikely, economists say.

Speculation that the RBA will not be able to lower rates further from the already record low of 2.5 per cent instantly pushed the Aussie dollar higher, BK Asset Management MD Boris Schlossberg said.

“Despite the lacklustre pace of growth in the Australian economy, the CPI data indicates that higher import costs are clearly seeping into the system, putting upward pressure on prices,” he said.

“With the RBA constrained for the time being, the Aussie may now find some support at the 87.50 US cent level as threat of further rate cuts has receded.”



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