Oil has risen to almost $100 per barrel, forcing central banks to raise rates

Oil, whose price has risen to almost $100, has a significant impact on the work of central banks around the world, Bloomberg writes.

As soon as the US and European central banks prepared to suspend a series of key rate hikes, Brent crude rose to a ten-month high of $95 per barrel, again creating risks of stagflation (a crisis in the economy in which the main processes in the economy slow down (lower demand, business activity, production, etc.) along with rising inflation).

Now, central banks have to assess whether the jump in oil prices is a short-term phenomenon or a long-term trend. Further decisions on key policy rates will depend on this.

Last week, the European Central Bank (ECB), contrary to expectations, raised rates by another 0.25 percentage points, partly due to the rise in oil prices.

"Consumers and households are extremely sensitive to oil and food prices, so I think it was right for the ECB to send a signal," the head of the regulator explained.

Today, the US Federal Reserve will make a decision on the rate, and by the end of the week, the Bank of England, the Bank of Japan, and the central banks of Norway, Sweden, and Switzerland will also make their decisions. Economic data in the UK, for example, point to the rate remaining unchanged, but a new rate hike is now possible due to oil prices.

According to analysts and oil organizations, high oil prices will continue at least until next year.

Background. As reported, the price of oil is rising amid expectations of an increase in the market deficit and due to the continued reduction in supplies by Saudi Arabia and Russia, as well as hopes for a recovery in Chinese demand.