The Organization for Economic Cooperation and Development released a report today calling for central banks to ease monetary policy in light of revised global growth projections. The OECD now expects the U.S. economy to grow 1.1 percent in the third quarter and 0.4 percent in the fourth quarter. This is a dramatic revision to earlier projections of 2.9 percent and 3 percent.
The news is worse for Europe where the three largest economies – Germany, France, and the U.K. – are expected to manage growth of 1.4 percent in the third quarter, but then contract by 0.4 percent in the final three months of the year.
Ã¢â‚¬Å“Policy rates in most OECD economies should be kept on hold,Ã¢â‚¬Â the OECD Chief Economist Pier Carlo Padoan wrote in the report. If signs of economic weakness emerge, Ã¢â‚¬Å“rates should be lowered where there is scope. Where there is not such scope, other measures could include further central bank interventions in securities markets, even at diminishing returns, and strong commitments to keep interest rates low,Ã¢â‚¬Â he said.
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