Notes on the Week Ahead Oil, Inflation and the Fed: The Slide and the Rollercoaster
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Oct 27, 2025 This discussion dives into the recent turbulence of oil prices, likening them to a roller coaster. The conversation explores the impact of falling oil prices on inflation and the recent CPI slip below 3%. Insights include the gap between EIA forecasts and futures markets, and the reasons behind OPEC+ raising output amidst a production glut. The hosts also dissect sanctions on Russian oil and their limited effectiveness. Ultimately, they ponder how lingering low oil prices could reshape inflation and Fed policy.
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Oil Is A Rollercoaster, Not A Slide
- Oil behaves more like a roller coaster than a steady slide, with sharp reversals common.
- Low prices often set conditions that eventually lead to disruptive spikes in the future.
Look Past Oil For True Inflation Signals
- Both investors and the Fed should look past short-term oil moves when judging core inflation.
- Low oil now can be temporary and misleading for long-run inflation trends.
Anticipate Fed To Use Oil Outlook In Policy
- Expect the Fed to cite benign oil forecasts when justifying rate cuts at upcoming meetings.
- Prepare for a 0.25% cut this week and further easing into 2026 if oil remains low.