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ECB / FED on oil impacts - BBH

FXStreet (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman note differences in the ECB and FED’s approach to oil’s inflationary pressures.

Key Quotes:

"Recall that in 2008 as oil prices moved above $140 a barrel, the ECB hiked rates for fear of the inflationary impact”.

“In the US, higher oil prices were considered deflationary, as a tax on consumption (and business activity more broadly)."

"Similarly, now the fall in oil prices is being seen in Europe as exacerbating the disinflationary headwinds, and perhaps tipping them into outright deflation”.

“In the US, the drop in oil prices may dampen headline inflation, but it will act like a tax break for a wide swathe of the economy."

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