Barclays: Oil Price Shock Has Passed, but Inflation Remains

Barclays said the oil price shock has faded after crude prices fell sharply from their peak during the Iran conflict, but the bank’s inflation outlook has worsened.

According to Jin10, Barclays said in a report to clients that the Federal Reserve’s policy path of keeping interest rates unchanged this year, rather than raising them, has narrowed noticeably in recent months. The bank added that this remains its base case.

Barclays said oil price shocks can come and go, but inflation does not, citing the overall strength of the U.S. economy. As a result, it said falling oil prices cannot free the Fed from inflation pressures.