Oil Price Jump Seen Hurting U.S. Economy: Volcker Says Price Jump May Undermine Econom
A ÛÏvery largeÛ increase in prices by the oil cartel at its meeting next month would ÛÏundermineÛ prospects for ÛÏreaching an orderly economic adjustment and a fairly prompt turnaround of the inflationary situationÛ in the United States, Federal Reserve Chairman Paul A. Volcker told Con-ÐÊgress yesterday.</br></br>The central bank chairman, in an otherwide optimistic appraisal of U.S. ÛÏchances for success with the more austere monetary policy adopted Oct. 6. warned that a further big oil boost "could force the Fed to change its money growth targets lor next year.</br></br>/ Volcker said that the bigger the oil price increaseÛÓon top of this yearÛªs fiO to 70 percent boostÛÓthe greater Û÷the resultant inflationary pressure, ÛÏand the more need there is for money.to finance the normal turnover (jf business activity."</br></br>This need for additional financing, lie added, ÛÏto some degree would impinge on the judgment we would have to make on tlie target, let's say. lor money supply next year, it's a derision really outside the framework in which people have been thinking.Û</br></br>Board sources, in response to a Washington Post inquiry, said that: ^Volcker meant that in the case of a fwery large oil price boost, the Fed '. might have to liberalize its money [-growth targets, but not as much as would be needed to meet the in-feereased demand for money.