Citigroup Sees Oil Forcing Up Inflation Faster Than Historically
- Bank says central banks such as Fed may ignore acceleration
- Economist says markets underestimating size of surprise
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The recent surge in the price of oil is set to propel global inflation faster than historically and by more than investors are anticipating, in part because key central banks are unlikely to respond by tightening monetary policy, according to Citigroup Inc.
In a report sent to clients on Friday, economist Pernille Henneberg estimated that a 10 percent rise in crude prices would lift headline inflation by about a quarter of a percentage point in the U.S. and the euro-area and by 0.21 point in the U.K. over a year. The upside surprise could be as much as 0.2 point higher than what markets now expect, she said.