Falling oil prices should give another boost to the economy, officials at the Federal Reserve said yesterday, despite the damage being caused to US oil and gas producers.
Minutes from the Federal Open Markets Committee’s latest meeting show the policymakers believe the net effect will be positive.
The price is falling both because of strong supply and weak demand. “Several [policymakers] indicated they expected slower economic growth abroad to negatively affect the US economy, principally through lower net exports, but the net effect of lower oil prices on US economic activity was anticipated to be positive,” the minutes said.
Strong growth also means there were some hints interest rates could rise soon.
“The minutes support our recent move to bring forward our forecast for the first rate hike to the second quarter of 2015, and for the range at the end of the year to be 75-100 basis points,” said ING’s Rob Carnell.