For policy makers, there is nothing more treacherous than the price of oil.
It began last year with a frightening surge, reaching $147 a barrel by July, pushing inflation across the developed world to a 15 year high. Then, it suddenly collapsed. Central bankers then began to fear deflation, and they are now frantically trying to keep the inflationary embers from being extinguished. Interest rates across the world have tumbled to historically unprecedented levels.
Could the oil price work its perfidious magic again in 2009? Could it suddenly explode once more, leading to a surge in inflation just has the central banks are hysterically producing unprecedented levels of liquidity?
The oil price still has the capacity to wreck the half-baked plans of backward looking central bankers. This year could be just as mad as last year.