The Federal Reserve (Fed), in desperate need of some good news on the inflation front, is now staring down oil prices fast approaching the $100-per-barrel mark. With Russian moves over the weekend increasing the odds of a military conflict with Ukraine, the energy spike is unlikely to reverse course anytime soon.
The near-term impact of higher energy on inflation readings is likely to keep pressure on the Fed to tighten policy more aggressively. Numerous Fed officials are speaking this week, as debate grows inside the Fed about whether to hike rates 25 or 50 basis points during next month’s Federal Open Market Committee meeting. This week’s economic calendar is busy, highlighted by Friday’s consumer spending report that includes the Fed’s preferred measure of inflation — the monthly Personal Consumption Expenditures price index.
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