Boston Fed Says 3.50%-3.75% Rates Can Target Oil-Shock Inflation as Job Risks Recede
Updated
Updated · Reuters · Jun 5
Boston Fed Says 3.50%-3.75% Rates Can Target Oil-Shock Inflation as Job Risks Recede
3 articles · Updated · Reuters · Jun 5
Summary
A Boston Fed paper says the Fed should focus more on inflation than employment when responding to the current Middle East war oil shock, arguing the U.S. economy now absorbs energy spikes differently than in the 1970s.
Higher domestic energy production and greater efficiency have muted the broad job losses once tied to oil surges, while energy-sector hiring can offset weakness elsewhere and reduce the classic stagflation tradeoff.
The June 16-17 Fed meeting is still expected to leave rates at 3.50%-3.75%, but the research lands as some officials weigh whether persistent war-driven price pressure could require hikes later this year.
The paper says the current shock remains smaller than the 1973-1974 OPEC embargo and the 1978-1980 Iranian Revolution, suggesting oil shocks have been reconfigured rather than eliminated for U.S. policymakers.