As if the news on inflation last week were not enough, over the weekend, the OPEC+, the group of countries that control oil production, and therefore its price, decided to extend production cuts for three months, to boost the price of crude and indirectly, gasoline. Energy has a weight of 5% in the CPI calculation, but it does have a big psychological impact on U.S. consumer. Interestingly, the three month extension cuts, coincide exactly with the duration of the U.S. driving season, that extends between Memorial Day and Labour day. Perhaps Russia, Iran, Saudi and Venezuela are aware of the impact that may have on consumers in an electoral year. And on inflation and the Fed’s decision to cut rates. Headwinds ahead for lower rates.
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