Oil Volatility Can Be Inflationary -- Market Talk

1116 ET - Oil volatility, not just the level, can be inflationary if some prices go up with oil but are reluctant to come back down, a note from BofA says. "Even though oil prices need not be a primary driver of monetary policy, the indirect impact of oil price volatility can be inflationary if the second-round effects are persistent," analysts write. While textbook monetary policy calls for looking through supply shocks, in a world of more frequent ones, their transitory nature becomes increasingly questionable. Ahead of the Fed's meeting next week, markets are still pricing in the Fed to hold rates steady, according to CME's FedWatch tool. (jessica.coacci@wsj.com)

(END) Dow Jones Newswires

July 27, 2026 11:16 ET (15:16 GMT)