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Aussie dollar in the trenches after low inflation result

The RBA has resisted cutting interest rates lower than the record 1.5 per cent, however, this week's lower than expected inflation data could make a cut inevitable.

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The Aussie dollar was battling in the trenches on Anzac day (April 25) after a disappointing inflation figure the previous day saw the Australian dollar plunge nearly 1 per cent. The headline inflation was below estimates for a 0.2 per cent rise and unchanged from the previous quarter.

This has added strength to previous predictions that the Reserve Bank of Australia could cut rates at its next meeting in early May, in the middle of an election campaign.

The last time the Reserve Bank of Australia cut interest rates during an election campaign was back in 2013 when Labor’s Kevin Rudd was prime minister. Labor lost that election to the Liberal-National coalition.

These headwinds for the Aussie are continuing it’s slide towards a recent multi-week low below US 0.70 cents.

Image: Australian War Memorial (E00454)

 

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