What does the rising price of oil mean for the Fed?

The Fed will announce its rate decision at 2 p.m. tomorrow, they are expected to keep rates steady. However, the rising price of crude oil, as a result of the OPEC supply cuts, to nearly $100 per barrel for the benchmark Brent crude, complicates the picture for the rest of this year.

The Fed looks at the CORE inflation measure, which excludes energy prices as they tend to be volatile(fluctuate a lot) over the short term. However, the price of oil affects the CPI basket in all sorts of ways, nearly every good and service in the CPI basket involves petroleum in either the production or the transportation process, which means an uptick in oil prices is reflected in all prices in the economy soon. As the price of oil dropped, inflation did so, in the last couple of months, but this increase in the price of oil probably would mean further tightening(increase in the interest rates) this year. It could also lead to a surprise hike tomorrow, however, that seems like a very long shot.

Rising commodity prices often lead to a decrease in economic activity, and are stagflationist, which means they cause the price level to go up while causing the supply, and production to go down. The 70s are often used as an example of this.

I'll update you tomorrow when the Fed announces the policy rate.