The dollar index traded around 102.3 on Friday, hovering near its lowest levels in seven months as data showed that US inflation eased further in December, fueling bets that the Federal Reserve will slow the pace of interest rate hikes. The annual inflation rate in the US slowed for a sixth straight month to 6.5% in December, in line with market forecasts. That was also the lowest reading since October 2021 and follows a 7.1% rise in November. Markets are now betting that the central bank would downshift to a smaller 25 basis point rate hike in its next meeting after delivering a half-percentage point increase in December. Meanwhile, a drumbeat of Fed officials reiterated their hawkish stance this week, with Fed Chair Jerome Powell saying that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.â€