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Significance
In reality, the oil price has less influence on inflationary trends and expectations today than in earlier decades, partly because central banks have greater credibility and economies are less energy intensive. Policymakers watch core inflation more closely.
Impacts
Only 7% of the US core consumer price index variability since 1993 is associated with energy prices, indicating weak energy pass-through.
Energy prices have weak effects on currencies, but sustained currency appreciations/depreciations have cumulative effects on oil prices.
The US stockmarket will fare better than EU bourses under higher oil prices.
Price changes need to persist to be incorporated into prices of other products and services, and impact firms, consumers and policymakers.
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