The International Energy Agency (IEA) warned today that the global recovery is in peril should the Federal Reserve’s anticipated stimulus spending – nick-named QE2 – cause commodity prices to rise. Eduardo Lopez, the IEA’s senior oil demand analyst, said that a weaker dollar resulting from the Fed “printing” more money to ease credit concerns in the US, could lead to weaker commodity prices as those goods are traded in US dollars.
“If commodities’ prices surge further, it could derail recovery,” he told a conference in Singapore. “QE2 could inflate prices in nominal terms and bring about inflation and could derail the recovery.”
Source: Reuters