OECD defends further interest rate hikes in the eurozone and the US

OECD today released interim economic forecasts

The OECD advocated today, in the update of economic forecasts, further increases in interest rates in many economies, including the eurozone and the US, and that support measures become focused on the most vulnerable.

In the update of the interim economic forecasts released today, whose report is entitled “Fragile recovery”, the Organization for Economic Cooperation and Development (OECD) considers that “monetary policy needs to remain restrictive until there are clear signs that the pressures in underlying inflation be reduced in a lasting way”.

“More interest rate hikes are still needed in many economies, including the United States and the eurozone. with inflation core slowly receding, it is likely that interest rates will remain high until mid-2024”, he points out.

Thus, it forecasts that interest rates will peak at between 5,25%-5,5% in the United States, 4,75% in Canada and 4,25% in the Eurozone (key refinancing rate) and the United Kingdom.

“The projected decline in inflation over the next two years may allow for a slight easing of monetary policy in some economies in 2024, especially in those where the tightening cycle is already close to being concluded”, he anticipates.

The OECD also said that budget support to mitigate the impact of high food and energy prices needs to become more focused on the most vulnerable, arguing that better targeting and a “timely” reduction in general support “would help ensure sustainability”. budget, preserve incentives to reduce energy use and limit demand.

It also advocates reform efforts and strengthening international cooperation to help overcome food and energy insecurity.