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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