Why rates unchanged under high oil prices? Should we blame Fed for high inflation?
Oil prices are now up over 30% since mid-June.
$WTI Crude Oil - main 2311(CLmain)$ reaches $92.43, a record high in 2023.
$Brent Last Day Financial - main 2311(BZmain)$ has risen from around $72 to $95.
To learn more about oil prices, you can click How to Gain From 25% Upside & 24h Quotes of Oil Futures?
But the markets believe the rate hike cycle is over and that Fed will start to cut rates in 2024.
data from cmegroup
Why do surging oil prices won’t affect rate hike decision?
Oil prices account small part for core CPI
MORGAN STANLEY: “.. a 10% increase in oil prices .. adds 35bp to headline CPI for 3 months, but just 3bp to core CPI.”
The main reason that the market stays positive about rate hike is the core CPI in August drops. And Fed pays attention to core CPI and services inflation other than housing.
Market still expects oil prices to be suppressed under the key resistance level of $94. High oil prices won’t necessarily drive Fed to increase rates.
The combat against CPI really over?
Some investors expect Powell to state “Mission Accomplished“ during FOMC. lol..
meme from WSB
Why do we need to combat against inflation?
WSB users argue that Fed creation incurs high inflation. $S&P 500(.SPX)$ $NASDAQ(.IXIC)$
meme from WSB
Why do surging oil prices won’t affect rate hike estimates?
Is the battle against CPI over or not?
Should we blame Fed for high inflation?
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Will market continue to dip amid FOMC decision?
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🌟🌟🌟Investors climb a wall of worry today in anticipation of the FOMC meeting later today. The Big Question is Will They Raise Interest Rate later this year or Won't They?
It is almost a certainty that the Feds will leave interest rates as it is at this meeting but investors are listening for signals what the Feds may do later this year.
The US markets are down today with all indexes closing lower.
I believe that the markets will be volatile this week. $SPDR S&P 500 ETF Trust(SPY)$
will drop and $Invesco QQQ Trust(QQQ)$
will also see a further slide.
High energy prices have no doubt thrown a spanner into the good works of the Feds causing the rise in inflation. It looks like oil prices may even hit USD 100 a barrel by year end due to Saudi Arabia and Russia cutting oil production by 1.3 million barrels per day.
I view this volatility as a golden opportunity to bargain hunt quality stocks on sale and keep for the long haul.
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Of course the Fed contributed to the high inflation. Dont think the battle against CPI is over; it’s more a watch and see. I dont buy oil or any commodities. Market will just fluctuate till the short term coast is clear
当然，美联储导致了高通胀。不要认为反对CPI的战斗已经结束；更多的是观望。我dont买石油或任何商品。市场将只是波动，直到短期海岸是明确的
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Many people are quick to point fingers at the Federal Reserve (the Fed) for high inflation, but is that entirely fair? Let's dive into these questions and explore my perspective.
Surging oil prices often triggers concern about inflation, as energy costs play a significant role in determining consumer prices. However, I believe that the relationship between oil prices and interest rate decisions isn't as direct as it may seem. Central banks like the Fed consider a broad range of economic indicators and trends when determining interest rates. While oil price spikes can temporarily boost inflation, central banks generally focus on more stable, long-term factors to make rate hike decisions. This means that surging oil prices alone won't necessarily lead to an immediate change in rate hike estimates.