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Does oil drive financial market measures of inflation expectations?

David Elliott, Chris Jackson, Marek Raczko and Matt Roberts-Sklar.

Oil prices have fallen by more than 50% since mid-2014. For much of this period, financial market measures of both short-term and longer-term inflation expectations appear to have mirrored moves in oil prices, particularly in the US and euro area. But how strong is the relationship between oil prices and financial market inflation expectations, and what should we make of it?

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