toddpw

Will the World's Central Banks Successfully Fight Inflation?

I don't agree that central banks are powerless to do anything about oil and food prices. Much of the run-up since last june comes from dollar weakness due to capital flight and the Fed's rate cutting campaign. Once that became an obvious trend, the speculators jumped in and added some amount of bubble premium to the mix.

To find out how much, all the central banks need to do is stop jawboning and actually hike rates. If there really is a substantial speculation element to the prices, then that should spook them out of the market and return commodities to a more realistic uptrend.