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June 1, 2021

Inflation Issues, U.S. Should Respond By Raising Interest Rates? - OECD

 The Organization for Economic Co -operation and Development (OECD) today announced their survey data on economic projections. According to the OECD, the global economic outlook is expected to improve as the increasing distribution of vaccines allows businesses to resume operations and the United States (U.S.) continues to stimulate the economy.


The global economy is expected to grow 5.8% this year and 4.4% next year. These estimates were raised from 5.6% and 4.0% previously released in March, respectively.


The economy has now returned to pre-pandemic activity levels, even though the economy has not yet achieved the economic growth expected before the pandemic crisis hit.



Add OECD chief economist Laurence Boone noted that the world economy is now heading towards recovery despite many obstacles. While vaccination campaigns have enabled developed economies to reopen businesses gradually, many in emerging economies are still struggling with slow vaccine distribution.


The OECD recommends that central banks in developed countries should maintain monetary flows and tolerate inflation targets. At the same time, the OECD stressed that the central bank did not react directly to the recent rise in inflation due to the risk of higher market rates and fluctuations.


For now the government is more focused on maintaining support for households and companies until vaccination is widespread enough.