LONDON (Thomson Financial) - A dip in a key measure of US core inflation pushed the dollar lower on speculation that the US Federal Reserve may soon be in a position to cut interest rates as inflationary pressures ease.

Figures released this afternoon showed core inflation, as measured by the core personal consumption expenditures price index, was unchanged in March on a monthly basis after rising by 0.3 pct in February.

On a year-on-year basis, the core PCE deflator slowed to 2.1 pct from 2.4 pct in the year to February.

“Easier core inflation is helping raise hopes that the Fed can begin to focus more on flagging growth than on stubborn inflation,” said Jamie Coleman at Thomson IFR Markets.

He noted, however, that US rate-setters will want to see more than one month’s inflation moderation “before declaring the battle won”.

At 13.58 pm BST, the euro was trading at 1.3625 usd, up from 1.3616 just before the data were released, while the pound rose to 1.9952 usd from 1.9935 previously.

jessica.mortimer@thomson.com

jkm/ic

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