Oil Prices Shakes Central Banks of G7
15 Pages Posted: 5 Oct 2015
Date Written: October 4, 2015
Abstract
Right now the oil price again ensures many headlines. The Bank of Canada became the first central bank in the Group of Seven to cut interest rates in response to plummeting oil prices, saying the shock will weigh on everything from inflation to business spending. U.S. banks are setting aside more money to cover bad loans to energy companies after oil prices plunged over the last year, raising the possibility that deteriorating loans could start to weigh on their earnings. The question now is: How will the price of oil continues to develop? There are several possibilities. The oil price crash is no longer just an oversupply, but could already signaling deflationary pressure. How was the development in the past year? What is the outlook?
Keywords: Oil, Bank of Canada, ECB, U.S. Banks, Inflation, Interest Rates
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