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<DIV><FONT size=2 face=Arial><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'">Bochra Kriout
writes:</SPAN></FONT></DIV>
<DIV><FONT size=2 face=Arial><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'"></SPAN></FONT> </DIV>
<DIV><FONT size=2 face=Arial><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'">Given the continuing turbulence in
energy markets, thought this might be of interest: a new OECD Policy Note,
entitled “<A href="http://www.oecd.org/dataoecd/9/3/47332660.pdf"><FONT
color=#800080>The Effects of Oil Price Hikes on Economic Activity and
Inflation</FONT></A>,” says that rising energy prices will only have a modest
impact on both GDP and inflation in the near term.<?xml:namespace prefix = o ns
= "urn:schemas-microsoft-com:office:office" /><o:p></o:p></SPAN></DIV>
<DIV>
<P class=MsoNormal><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'"><o:p> </o:p></SPAN><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'">The authors use the OECD’s Global
Model to gauge the effects of oil price hikes on activity and inflation. The
Model projects that a $10 increase in the price of oil could reduce activity in
the OECD area in the second year after the shock by two tenths of a percentage
point. The price shock is expected to raise inflation by roughly two tenths of a
percentage point in the first year and by another one-tenth in the second year.
<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'"><o:p> </o:p></SPAN><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'">If the $25 increase in the price of
oil that has taken place since the Tunisian uprising were to be sustained,
activity could be reduced by about 0.5 percentage points in the OECD area by
2012, and inflation could rise by 0.75 percentage points.<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'"><o:p> </o:p></SPAN><SPAN
style="FONT-FAMILY: 'Arial','sans-serif'">Given currently low levels of
inflation and forward-looking expectations, monetary policy may not need to
react to the recent oil price hikes, according to the report.</SPAN></P>
<P class=MsoNormal><SPAN style="FONT-FAMILY: 'Arial','sans-serif'"><o:p><A
href="http://www.oecd.org/dataoecd/9/3/47332660.pdf">http://www.oecd.org/dataoecd/9/3/47332660.pdf</A></o:p></SPAN></P></FONT></DIV></BODY></HTML>