NEW YORK, Feb 20, 2008 (AFP) – The dollar firmed Wednesday after higher-than-expected US inflation data raised concerns the Federal Reserve will curb interest-rate easing aimed at boosting sluggish economic growth.
Dealers said government figures showing US consumer inflation rising 0.4 percent in January, above forecasts for a 0.3 percent gain, was a cause for concern.
US core inflation, which strips out volatile food and energy prices, rose 0.3 percent in January, the strongest gain since June 2003. Most analysts had predicted that core CPI would increase 0.2 percent.
The euro was at 1.4712 dollars around 2300 GMT, down from 1.4725 dollars late Tuesday in New York.
The dollar rose to 108.13 yen from 107.76 yen.
“This rebound in (US) inflation couldn’t have come at a worse time for the Federal Reserve,” said Paul Ashworth, senior US economist at Capital Economics.
“Persistently high inflation could take away the Fed’s flexibility to respond more aggressively to reduce borrowing costs, just at the time it needs that flexibility the most (to help out the slowing economy),” Ashworth said.
At the same time, with oil prices running at record highs at around 100 dollars, inflation pre