The Australian dollar pushed higher on Friday after soft inflation figures out of the US and a Federal Reserve board member noted that the US central bank needed to wait a little longer before pulling the trigger on interest rates.
On Friday, the Australian dollar reached a high of US78.40c, its highest level in nearly 1 month.
Federal Reserve Bank of Atlanta President Dennis Lockhart noted in a speech in Florida that he would like to see the unemployment rate fall further as well as a pickup in inflation before the US central bank raises Interest rates,
“Ideally, I’d like to see direct, affirmative evidence in the data that the desired outcomes are in fact materializing; this test would call for a falling unemployment rate and rising inflation.” He noted
“A murky economic picture is not an ideal circumstance for making a major policy decision,” he added
On the timing of an Interest rate rise Lockhart noted that he does not expect inflation to increase dramatically in the nearest future with the number eventually rising in the last half of the year, which has analysts now predicting that the US Fed will move on rates in September
“Falling unemployment and rising inflation may be unlikely in the very near term. In my working forecast, inflation does not pick up until the second half of the year.” He said
“I think waiting a while longer improves the chances of seeing confirmation from incoming data that the economy is on the desired path,” Lockhart said. He also added.
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