2018.04.2402:43:00UTC+00Australia Inflation Remains Soft in 1st Quarter

Australian consumer prices stayed soft in the first quarter as core inflation started a year below the central bank's target. Economists maintained the view that the central bank will continue to hold interest rates.

The Australian dollar moved near a four-month low as the headline consumer price index increased 0.4 percent in the first quarter. The Aussie fell to $0.7577 before recovering to $0.7605.

Annual CPI inflation increased 1.9 percent year on year in the three months to the end of March, according to the Australian Bureau of Statistics, unchanged from the quarter earlier. Key measures of underlying inflation favored by the Reserve Bank of Australia (RBA) averaged around 1.9 percent for the year, much as forecast.

Core inflation has now undershot the RBA's long-term target band of 2 percent to 3 percent for nine consecutive quarters, the longest period on record.

The RBA has kept interest rates at an all-time low of 1.5 percent since mid-2016 and sees no strong case for shifting anytime soon.

There is “no particular rush" to hike, RBA Assistant Governor Christopher Kent said. While the next change in interest rate was likely to be up, he said progress on inflation and unemployment was expected to be only gradual.

Interest rate futures imply around a 30 percent likelihood of a move by December, with 1.75 percent not fully priced in until June next year.