Thursday, September 8, 2011

Interest rates should go up... or maybe down (OECD)

April 5 2011:
The OECD said central bankers increasingly need to focus on tackling inflation as the economic recovery takes root in major economies, adding that some of its members faced the risk of inflation becoming "un-anchored." 
"We see inflationary expectations creeping upwards a bit everywhere, I would say, in Europe, in the United States, in the UK," OECD chief economist Pier Carlo Padoan said in an interview with Reuters. 
"Central banks should keep inflation expectations under control," he said.

Today (September 8, 2011):
“Growth is turning out to be much slower than we thought three months ago, and the risk of hitting patches of negative growth going forward has gone up,” OECD Chief Economist Pier Carlo Padoan said during a presentation of the OECD’s latest Interim Economic Assessment.
The OECD recommends that central banks keep policy rates at present levels, and barring signs of recovery, consider lowering rates when there is scope.
Maybe we were too optimistic about the strength of the recovery few months ago... (Brad DeLong makes a similar point in this post).

Antonio Fatás
on September 08, 2011 |   Edit