Even if the dramatic drop in the oil prices might have spooked some investors, but Federal Reserve chief Janet Yellen says she isn’t worried of the plunge.
According to Yellen, the tumbling of oil prices below USD 55 a barrel is a good news for American consumers as it would be just like a tax cut for them.
While addressing a press conference on Wednesday, Yellen said, “From the standpoint of the U.S. and U.S. outlook, the decline we’ve seen in oil prices is likely to be, on net, a positive.”
“It’s good for families, for households. It’s putting more money in their pockets,” she told media persons.
The lowering of oil prices and the cheaper energy is resulting into the lowering of expenses for many US businesses such as transportation industry like airlines.
Due to the fall in oil prices, the drivers in at least 13 states countrywide are able to buy gas for cheaper than USD 2 a gallon.
According to Yellen, the fall in oil prices may lead to cutbacks in the drilling sector that in return is expected to slow down the capital spending for wells that are not a profitable affair in the current environment.
The Fed chief has, however, underlined that even if the shale boom, the country is still a net oil importer. This connotes cheaper oil prices are a good sign for the overall economy.
“On balance, I would see these developments as a positive,” she asserted.
On Wednesday, the Federal Reserve has offered an upbeat assessment of the recovering economy and the labor market, signaling a hike in interest rates early next year.