The Price Of Oil Breaks Higher. Yes, It’s Inflationary.

The Fed can take interest rates lower any time it wants to but the price of oil is up to the whims of world markets, many of which don’t care about the Fed’s problems. So, for all the talk about an inflation target of 2% or 3% and what officials might do about it, how much Americans pay at the pump is not exactly under government control.

When West Texas Intermediate Crude and Brent Crude prices broke out to higher prices this week, a lot of the Jackson Hole talk by Chair Powell began to look almost beside the point. Many other factors come into inflation outcomes, but oil definitely makes the list, up near the top.