Dealing with energy price shocks
Rising energy prices are not a reason for tighter monetary policy
Between 2014 and 2016 the price of oil collapsed. The fall was enough to drive headline inflation below zero in both the UK and the Eurozone.
That brief period of deflation was accompanied by plenty of clever-sounding-but-ultimately-misguided analysis warning of the dangers of a deflationary spiral and urging central banks to ease their policy.
A very de…