Australian Dollar Drops 1% On Subdued Inflation

The Australian dollar dropped on Wednesday after weaker than expected inflation in the first quarter, raising expectations of a possible rate cut by the central bank. In quarter-on-quarter terms, consumer inflation was unchanged in March after a 0.5 per cent rise in the December quarter, according to the Australian Bureau of Statistics. That compared to a 0.2 per cent rise forecast by economists polled by Reuters. Consumer prices rose 1.3 per cent year on year in March, against February’s reading of 1.8 per cent. The reading was also below a Reuters poll forecasting a rise of 1.5 per cent. The Reserve Bank of Australia is considering an interest rate cut to support growth, having first introduced the possibility in February. The bank, in its April meeting minutes, said a cut would “likely be appropriate” if inflation did not move higher, and unemployment rose. Read more