Changes in oil prices will have no impact on US inflation — Morgan Stanley

According to Investing.com, oil prices surged following escalating tensions in the Middle East, causing investor concern about a potential spike in US inflation. However, according to experts at Morgan Stanley, the impact of these events will be "minor."

Based on the company's model, the recent 10% rise in oil prices will add just 3 basis points to the current level of core inflation in the United States. Furthermore, the firm's analysts anticipate a potential pullback in energy prices in the near term and, consequently, a reduction in the inflationary impact.

Also in their Friday note, Morgan Stanley economists pointed to the view held by US Federal Reserve Chair Jerome Powell that sharp fluctuations in the oil market do not have a long-term impact on inflation. In September 2023, following another spike in oil prices due to Saudi production cuts, the bank had already published similar calculations.