Higher Oil Prices Won't Deter Consumers or the Fed

Crude oil prices have risen recently, yet the impact may be muted: Higher prices won't be a big drag on consumption, nor will they be sufficient to change the Federal Reserve inflation goals or alter expectations of three rate hikes this year.

If oil prices are rising because of a shock from low supply, it is considered a negative. If they are climbing because of stronger demand, it is not as problematic. A bit of both factors appears to be at work now. Global growth has picked up, led by strong activity in the industrial sector. Meanwhile, supply conditions have reached a better balance.