OECD Urges for Rapid Action as it Slashes Growth Forecasts

The Organisation for Economic Co-operation and Development (OECD) is calling for urgent action by world leaders to tackle slowing growth.
The call came as the think tank cut its global economic forecasts for 2016.
Last year, it forecast 2016 growth of 3.3%. It now says that will be just 3%.

It said trade, investment and wage growth were all too weak, adding that cutting interest rates and other monetary policy fixes were not sufficient to reflate growth.

Interest rates in many parts of the world have been cut to attempt to stimulate borrowing and investment. Rates in many countries, including the UK, are at record lows.

The US, notably, raised its rates by a sliver late last year. This was designed to calm investors’ nerves, but to many, it now seems like a prematurely optimistic move.

Negative rates
The OECD has now cut its growth forecast for the US to 2% from the 2.5% it was predicting last November, one month before the country’s interest rate went up.

In Europe, Japan and Switzerland, rates have been cut to negative, meaning that depositors pay the bank for keeping their money.
The OECD, a Paris-based think tank funded by rich nations, said: “Monetary policy cannot work alone.

“A stronger collective policy response is needed to strengthen demand.”

via BBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza