New York, New York (WiredPRNews.com)–CNN reported that during the last few months, the prices of crude oil are rising and the value of the dollar is decreasing continuously. Unfortunately, this dire situation which is causing havoc on the economy will continue unless the Federal Reserve closes its rate–cutting campaign. Since September 2007, the Federal Reserve has cut rates by 3% in order to stimulate the suffering U.S. economy.
As a result, the rate cuts have led to an increase in the price of oil by 80% and decrease in the value of dollar by 10%. “The weak dollar is a major detriment to the price of oil,” says Stephen Schork, publisher of the energy industry news letter, The Schork Report. “It’s keeping prices artificially high.”
Some economists forecast that one quarter percent of a point cut is expected in its key funds rate, while some believe that the central bank is going to keep rates steady or even raise rates in near future to protect against inflation. “All of us are hoping for a 25-point cut with a statement that that’s it,” says John Kilduff, the analyst of the MF Global energy. “Some of us wouldn’t mind if there’s no cut.”
It has been expected that once the rate cutting comes to an end, crude oil prices will lower. “There is a very strong correlation between the dollar and crude, so it all depends on how dollar reacts to the news,” says Schork. “If the dollar appreciates, then that will give crude leeway to move downward and drive a stick into this bubble.”
Wired Finance Reporter