Sunday, May 11, 2003

OECD Joins the Call for Sharp ECB Rate Cut

I'm afraid I'm not a special OECD fan, and in the comparison with Rogoffs IMF facelift there is 'ni color' as we say here in Spain. Nor am I willing to cite advice from Jeam-Phillipe Cotis since, frankly my dear, he may not have a clue. (Obviously there are exceptions to prove every rule, and Bessanini, Scarpetta, Scherer et al do a fine job). Also note the 'unexpectedly protracted' comment about the downturn: it depends on who you read doesn't it ? (Maybe the OECD people need to get into collaborative filtering). However it is interesting to note the growing consensus that something should be done to try to stop the big ship from sinking. Those in the little boats need to mind the backwash!

The eurozone needs a significant cut in interest rates "the sooner the better" to stimulate economic recovery, the Organisation for Economic Cooperation and Development said on Thursday. The Paris-based group of the world's 30 richest nations warned of slowing eurozone growth and said there was a clear case for a cut of 0.5 percentage points off the current interest rate of 2.5 per cent. The European Central Bank meets in two weeks.In its twice-yearly economic outlook published on Thursday, the OECD cut sharply its forecasts for eurozone growth this year while raising its expectations for the US in 2004.

The OECD indicated US interest rates were "well-adapted" to the economic situation but appeared worried about inflationary pressure in Britain, where it said short-term interest rates would need to rise next year. . World economic recovery would be "progressive if unspectacular" having been "unexpectedly protracted" and marked by failing confidence, the OECD said.
Source: Financial Times

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