John At The Center

I’m with the Fed view on this, but understand that it’s a very gray issue:

Fed officials also tended to see rising energy prices as a de facto tax, and thus a factor arguing against rate hikes. Given a relatively steady need for gasoline, the more money a household spent on fuel was less money that could be spent elsewhere. Some economists believe that the surge in energy prices and resulting assault on household wealth may have been one of the key factors creating the current global recession.

“The Fed should have paid some attention to the signals coming from oil prices and raised interest rates faster and higher than it did in 2004 to 2006,” said a paper released Friday in conjunction with a conference held by the University of Chicago Booth School of Business and Brandeis International Business School, in New York.

via Real Time Economics : Economists: Fed Won Risky Battle With Energy Price Surge.