This Oil Spike is not a One Day Wonder
Expect it to continue into the Spring before settling down hopefully.
-Would take big oil spike to hurt GDP
Wed Feb 23, 2011 7:56pm GMT
BIRMINGHAM, Ala. Feb 23 (Reuters) - It would take a significant and sustained rise in oil prices to seriously hurt U.S. economic growth, Philadelphia Federal Reserve Bank President Charles Plosser said on Wednesday.
"I think that oil would have to rise significantly more and stay there for a while to have dramatic effects on GDP growth," he said in response to questions from reporters after giving a speech in Birmingham, Alabama.
"Commodity price increases do bear watching ... I don't think these things cause inflation, but they may be symptomatic of incipient inflation; that's harder to tell," he said.
Treasury Inflation Protected Securities have risen "some, not a lot" recently, Plosser noted. "Some view it as an encouraging sign and that they'll stabilize at nice levels, but if they continue to rise that will be a concern," Plosser said.
U.S. crude surged to a 28-month high of $100 a barrel on Wednesday as escalating violence in OPEC producer Libya slashed output there and investors bet the unrest could spread to other oil exporters. (Reporting by Kristina Cooke; Editing by James Dalgleish)