1986:1 -1999.12 ( ex 1990:9) :  17.9 [18.0]  3.60  2000:1 -2004:07  27.7 [27.4]  4.51  O IL  04  Figure 3 Correlation between oil price and GDP R e v e r s e d c a u s a lit y : O il is d e m a n d d r iv e n s in c e 1 9 9 5 40  .0 5  35  .0 4  30  .0 3  25  .0 2  20  .0 1  15  .0 0  10  -.0 1 1985  1990  O IL _ O E F  1995  2000  G DPW O RLD_YY  Correlation: World-GDP (yoy) and Oilprice  6  1980 -1994.4  -0.389  1995.1 -2004.4  +0.330  BIS Review 69/2004  Figure 4 US oil inventories  60  360 340  50  mn barrels  320 40  300  30  280 260  20  240 10  220 200  0 1  4  7  10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 W eek  W eekly Min and Max since 1994  Crude Oil Inventory 2004 (4wk avg.)
As Fed Governor Gramlich has stated in a recent speech on oil shocks and monetary policy, the worst possible outcome for monetary policy makers would be “to let inflation come loose from its moorings”.4 Central banks will remain vigilant in their examination of longer-term inflation expectations. The Swiss National Bank, for one, would promptly react if there were any indications in its quarterly inflation forecast that second round effects were likely to undermine its long-term track record of maintaining price stability in support of maximum sustainable economic growth. Appendix Figure 1 Nominal and real oil prices on oil  Economic dependency in bbl/th GDP in PPP 1.2  [USD/bbl] 60  1.0  50 Brent crudenominal Brent crudereal 1971  40  0.8  0.6  30 0.4  20  0.2  10  0.0  0 1970  US Germany France Switzerland  1975  1980  1985  1990  1995  2000  1980  1985  1990  1995  2000  Source: BP, OECD, GS  4  Edward M Gramlich, “Oil Shocks and Monetary Policy”, Remarks at the Annual Economic Luncheon, FRB Kansas City, Missouri, 16 September 2004.