Australia’s TD Securities Inflation fell to 2.6% in the year to March, down from 3.1% in the preceding month. Signs of slowing price growth give the Reserve Bank of Australia more room to surprise economists calling for rates to remain at 3.25% with a rate cut at a policy announcement later this week. Traders seem to agree, with overnight index swaps pricing in a 0.25% reduction this time around and between 50-75 basis points in total easing over the next 12 months. Early signals coming out of the central bank itself also hint at a dovish bias: Governor Glenn Stevens recently reiterated that lower benchmark rates remain an effective way to stimulate lending while his assistant Ric Battellino noted last week that annual output is “likely to fall in 2009”.
DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
