The Odd Man Out in a Comparison of Oil Prices, Inflation and the Federal Funds Rate
Abstract:
Surprisingly, there is an odd man out when three key economic series − the world price of oil, the U.S. inflation rate and the federal funds rate of the Federal Reserve − are compared with one another. This is shown most clearly in the accompanying two graphs. An analysis of this phenomenon leads to the contrarian position that there is a strong argument for moving interest rates higher sooner than might otherwise be planned.
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Surprisingly, there is an odd man out when three key economic series − the world price of oil, the U.S. inflation rate and the federal funds rate of the Federal Reserve − are compared with one another. This is shown most clearly in the accompanying two graphs. An analysis of this phenomenon leads to the contrarian position that there is a strong argument for moving interest rates higher sooner than might otherwise be planned.