The Rise in Oil Prices Is a Problem for Fed’s Soft Landing
- US central bank often downplays inflation impact of higher oil
- Latest rise comes as consumers show incipient signs of strain
Traditionally, the Fed has tended to play down the impact of higher oil prices on inflation.
Photographer: Erin Scott/BloombergThis article is for subscribers only.
The Federal Reserve is confronting a familiar nemesis as it tries to pilot the economy into a rarely-seen soft landing: rising oil prices.
Surging energy costs played a role in tipping the US into recession in the mid-1970s, as well as the early 1980s and 1990s, as they drove up inflation and robbed consumers of purchasing power.