Zeev's Turnips Talk Politics (ZTTP)

[Rick Faurot]

The Fed's oil bet

A drop in prices is what the central bank is betting on, but it's been a no show so far.
August 12, 2004: 8:37 AM EDT

NEW YORK (CNN/Money) - Could oil be taking a toll on Europe's growth now, too?

More and more evidence is piling up that growth has slowed in some of the biggest economies there, and rising oil prices could be part of the reason.

The oil question is a big one for the Federal Reserve. If they come crashing down at some point, because global supplies build up, terror fears abate, and inventories build, prices could come tumbling down. And that could bring gas prices down too -- a boon to consumers and a boost to the economy.

The Fed is betting on that.

But in the oil market no one has made money this year by betting on falling oil prices and as a result the traders and speculators have the bit in their teeth.