OECD Argues in Favour of Fed Rate Hike

“Global growth prospects have weakened slightly and become less clear in recent months,” OECD chief economist Catherine Mann told Reuters in an interview.

The United States stood out as a bright spot. The OECD raised its growth outlook for this year to 2.4 percent from 2.0 in June. It lowered its 2016 forecast to 2.6 from 2.8 percent previously, though.

The OECD saw more arguments in favor of the Federal Reserve raising interest rates than standing pat when its policymakers meet this week rather than at their next meeting at the end of the year.

“Raising interest rates now would remove uncertainty in the markets,” Mann said. The pace of future increases was more important than whether the Fed acted now or in December, according to the OECD’s simulations, she said: “The path matters four times as much as the timing.”

Looking at the euro zone, its outlook was the brightest in four years. Its growth was projected at 1.6 percent this year and 1.9 percent next year.

via Reuters

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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, Alfonso Esparza 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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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