Markets were rocked last week due to a dramatic drop in oil prices.  This week we discuss what to make of it.

The plunge in the price of oil should act like a shot of adrenaline to the world economy.  But, there will be winners and losers.  Overall, the effect of cheaper oil is clearly positive.    The Economist magazine provides thoughtful analysis.

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Falling oil prices will encourage the Fed to keep interest rates lower for longer, because falling oil prices will reduce already-low inflation still further.  Lower oil prices will reduce the headline inflation rate at a time when the Fed is trying to raise underlying inflation, according to David Wessel, writing in The Wall Street Journal.

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The dark side of the oil shock.  Pessimists have made a lot of noise.  If pessimists have a case, it is in oil producers in the emerging world, especially Russia.  But, among oil importers in the developed world, it is hard to see much of a dark side, according to Gavyn Davies of the Financial Times

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