Rising oil prices now cause low long-term interest rates. Some convoluted economic thinking from the New York Times:
Yet this time prices are not soaring. Overall consumer prices in July were only 3 percent higher than a year earlier, and prices excluding energy and food rose only 1.8 percent. This has allowed long-term interest rates to decline, as investors have concluded that higher energy costs are likely to slow the Fed’s hand in raising short-term rates; not speed it.
Low interest rates, in turn, have provided an unexpected stimulus to household borrowing - the main economic fuel of the last three years - and given a big boost to construction and housing. In the week ended on Aug. 13, the Mortgage Bankers Association’s mortgage index jumped 11 percent from the week before, and the refinancing index soared 21 percent. Housing starts surged 8.3 percent in July.
Oil Price Spike = Economic Stimulus
