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St. Louis Fed economists say oil would have to hit $0/barrel (yes, you read that right) by 2019 in order to achieve the super low inflation rates predicted by the market.
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St. Louis Fed president James Bullard thinks the Fed should listen to the markets and veer from its rate normalization path. He says, “I regard it as unwise to continue a normalization strategy in an environment of declining market-based inflation expectations.”
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The national Fed thinks the forces holding down inflation are just temporary, despite what financial markets say, Bloomberg reports. Employment, wage growth and the Consumer Price Index all paint a different picture, showing strong economic numbers.
With the markets pricing ridiculous lows for future oil prices, it might be a good call to take them with a grain of salt—especially when futures contracts put oil at $50/barrel in the same time frame. [Bloomberg]
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