Discussion in 'Economics' started by The Kin, May 9, 2008.
It's the only thing which will stop the madness in crude. Think about it.
Yes, the Fed can control oil prices simply by playing with interest rates. Why has nobody thought of this genius idea before?
No need to be smart. I'm under the impression that a rate hike would strengthen the dollar which will decrease the price of crude, which is priced in dollars. In theory it should also decrease US demand slightly albeit the US isn't the only major player anymore.
I don't think a fed rate hike would should slightly increase us demand of oil, as consumers tend to buy more of what is cheaper.
the fed just cut last week. if they thought crude prices warranted a rate hike they would probably telegraph it via speeches and do it at an fomc meeting.
If the FED reaised rates to be in line with inflation (around 4%), it would go a long way towards blowing the top off of the commodity bull. It would also strengthen the dollar, kill inflation, and probably boost the savings rate. On the other hand, GDP growth would slow, housing crisis would continue, and wall street bonuses would suffer. Sometimes, making the right decision is the one that hurts the most; therefore, we can be sure that the FED will continue lowering rates!
The fed has little to do with the price of oil at this point. If they raised rates any pullback in crude would be temporary.
They sure had alot to do with it in the last 6 months. You can thank them for at least 20%-30% of the run in oil.
No rate hike = $175 oil Benny Boy....
Who wants a strong US$ anyway ???
Not the Fed.
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