dollar firmed across the board as the market awaited key US inflation data this afternoon that could have a major bearing on US interest rate expectations. Analysts forecast a 0.5 pct rise in the headline US CPI inflation rate for January following a 0.1 pct fall in December. The focus though is likely to centre on the core inflation rate, which is expected to rise by 0.2 pct, up from the 0.1 pct recorded the previous month. The inflation data comes as expectations of further interest rate hikes from the US Federal Reserve were reinforced by yesterday's publication of the last meeting of the rate-setting Federal Open Market Committee. Though there were some relatively dovish elements in the minutes, the market focused on the hawkish comments, such as the focus on price risks. "The minutes stated that the chances of additional monetary policy were reinforced by core inflation readings that were higher than desirable over the long run," said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi. "With that in mind, today's CPI data from the US will be one of the key reports of the month in determining interest rate expectations," he added. As things stand, markets widely expect two more quarter point rate hikes from the Fed, taking the benchmark rate to 5.00 pct before year end. At the last meeting on Jan 31, the FOMC raised its benchmark Fed funds rate a quarter point for the 14th straight time to 4.50 pct. Mansoor Mohi-uddin, currency strategist at UBS, thinks the prospect of further rate hikes by the Fed "are well and truly priced into the market" and that the dollar "will be disproportionately sensitive to evidence of a slowing economy or an easing in inflation pressures". Analysts also noted that developments in the euro zone and Japan may well have a major bearing on the dollar's performance. Tomorrow sees the release of the December Tertiary index from Japan and the Ifo business expectations index from Germany. Both have the potential of influencing interest rate expectations at the Bank of Japan and the European Central Bank. Elsewhere, the pound was little changed after the minutes to the February meeting of the Bank of England's rate-setting Monetary Policy Committee cemented market expectations that there won't be another interest rate cut anytime soon. The minutes again revealed that only one of the nine-member Monetary Policy Committee -- Stephen Nickell -- voted in favour of a rate cut on Feb 9. The majority were concerned that a rate cut would stoke up inflation and remain worried about higher energy prices feeding through into inflation. "Overall a dull set of minutes, in contrast to the pre-release hype," said John Butler, economist at HSBC.