Publications: Notes at the Margin

Oil Prices, Exchange Rates, and Inflation (April 1, 2024)

 

Speculative pressure pushed oil prices higher during the first quarter of 2024. This pressure likely will boost prices in the second and third quarters as well. Analysts stuck in their silos assert that the price rise will create problems for the US Federal Reserve. They are wrong because oil is relatively unimportant in the US economy today. The real losers will be Europe and, especially, the emerging market nations where higher oil prices cause severe economic damage. Oil-exporting countries may end up, however, as the real losers from the speculatively driven price rises.

 

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