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Spillovers

ECB concedes oil and inflation do mix

Swaha Pattanaik 

Swaha Pattanaik Central bankers set out to ignore temporary ups and downs in markets and economies, focusing instead on how inflation will behave in the medium term. But sliding oil prices mean they can do so no longer. European Central Bank Chief Economist Peter Praet wrote in a German newspaper on January 13 that the impact of falling energy costs on inflation is not temporary. As he points out, lower oil prices can drive down prices in sectors such as transportation and can eventually lead to lower wage settlements. That is even more the case when oil prices have been falling as long and by as much ...

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First Published: Wed, January 13 2016. 21:32 IST
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