Oil Price Drop Has Implications for Fed Decisions

The latest plunge in crude prices has implications for monetary policy in the United States, a top Federal Reserve official said Thursday.

St. Louis Fed President James Bullard — a voting member of the central bank’s policymaking committee — said in a speech the recent movement in oil prices has been “very substantial.”

U.S. crude futures have fallen nearly 17 percent this year and briefly dipped below $30 a barrel earlier this week. Bullard also said it could take longer than expected for the oil market to stabilize, but added that low prices are a “net positive” for the economy.

“Once oil prices stabilize, headline inflation should return to the Federal Open Market Committee’s inflation target of 2 percent, although it may take longer than previously thought,” he said.

via SOURCE

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza