St. Louis Federal Reserve Bank President James Bullard said OPEC+’s decision to cut production was unexpected and that higher oil prices could make the Fed’s job of fighting inflation more challenging.
“Whether it will have a lasting impact, I think is an open question,” added Bullard, who is not voting on monetary policy this year. “Oil prices fluctuate and are difficult to track exactly, but they could fuel inflation and complicate our work.”
While acknowledging the potential significance of the change, Bullard also said that higher oil prices this year are consistent with the economic outlook for higher energy demand.
“I would still have expected slightly higher oil prices, with China coming back earlier than expected during the first half of 2023, Europe verging on recession and strong US data, all quite bullish factors for the oil market” .