The sudden plunge in oil prices has helped keep prices low, but the Fed believes the drop in oil prices will only be short-term. However, the stronger dollar is a dominant factor in keeping commodity prices depressed.
Consequently, the low-inflation environment is also fueling bets that the Fed could push off any interest rate hikes.
If the Fed raises rates too soon, it could raise deflationary pressures, which could send the economy into a spiraling decline as cash becomes more valuable, prices continue to fall and Americans withhold spending to buy something cheaper tomorrow. [ETFs for a Deflationary Period]
iShares TIPS Bond ETF
