As oil muddies outlook, Fed policy less certain

March 10, 2011

Monetary

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By Pedro Nicolaci da Costa

WASHINGTON (Reuters) – Surging oil prices are deepening a split inside the Federal Reserve, blurring the likely direction of monetary policy and making next weeks policy meeting all the more contentious.

The sharp rise in energy costs, precipitated by a wave of pro-democracy uprisings across the Arab world, could affect the economy in different ways, by retarding growth, boosting inflation or, in the worst case, both.

This complicates the terrain for policymakers, hardening long-held positions ahead of the Feds March 15 gathering.

The meeting has definitely gotten more interesting for the participants than theyd like, said Mitch...