In sum, lower interest rates and the reduced foreign exchange value of the dollar may have played a role in the rise in the prices of oil and other commodities, but it probably has been a small one. The rise in commodity prices presents particular challenges for monetary policy because such increases both add to near-term inflationary pressures and damp demand.
A tendency for increases in commodity prices to become a factor in ongoing pricing and wage-setting more generally would be a worrisome development that would over time tend to undermine economic welfare. In the near term, headline inflation is likely to continue to be boosted by the direct effects of the recent increases in the prices of energy and food.