We like to criticize the Fed when inflation increases, but credit it when inflation declines. This is done more out of habit than on the basis of the evidence. Today there is another and more powerful factor at work. The price of oil is a major leading indicator of Washington’s inflation statistics. It’s a major factor in the cost of living worldwide; not merely the most prominent driver of energy costs, but also an influence on the prices of food and numerous other goods to whose production energy is an input. The oil price is also a wild card. Fast-moving geopolitical events can change it dramatically.
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