ICYMI – Bank of America says rising oil prices (>$100) will prevent central bank from cutting rates

Bank of America is wary of rising commodity prices:

“Even if the evolution of commodity prices does not call into question the start of the spending reduction cycle in June, it could prevent the ECB from accelerating the cycle in December.”

And it will become even more cautious if the bullish cycle continues. The bank’s analysts say that if oil prices rise above $100, central banks will not be able to cut rates, due to the pass-through effect of higher inflation.

• The BoA adds divergent policies to the ECB and the Fed:
• the ECB should ease more than the Fed
• if the FOMC maintains EUR/USD rates could fall to parity
• USD will benefit from support from a stagflation/risk scenario

For the latest oil chart, I posted Brent and WTI here this weekend: