The Federal Reserve’s decision to raise interest rates last week should mean lower fuel prices in the Midwest, but not for a while. Gas Buddy Analyst Patrick DeHaan says monetary policy tightening makes the dollar stronger, which impacts worldwide crude markets.
“Oil is globally traded in dollars,” DeHaan said. “It can actually make oil cheaper for Americans or anyone holding dollars while it makes it more expensive for everyone else, and that usually puts downward pressure on crude oil prices.”
However, changes won’t be immediate, as the quarter-point jump barely lifts the key rate past zero, where it’s been for seven years. DeHaan says the pressure won’t be noticeable unless the Fed continues stair-step increase plan. Crude oil is already trading near 11-year lows.
