OECD global economy report: Inflation forecasts and interest rate hike expectations
According to the OECD report, inflation forecasts rose in G20 economies excluding China and Saudi Arabia, and it was projected that the Fed could implement a new interest rate hike.
According to the latest report published by the Organisation for Economic Co-operation and Development (OECD), global inflation is projected to proceed faster than expected in the upcoming period. While consumer inflation forecasts were revised upward in all G20 countries except China and Saudi Arabia, it was reported that central banks, led by the US Federal Reserve (Fed), may head toward new interest rate hikes.
Inflation Forecasts Rose
According to the OECD report published on Wednesday, global inflation is expected to follow a faster course in 2027 compared to previous projections.
Expectations regarding consumer price increases were revised upward for all G20 economies except China and Saudi Arabia compared to June.
Signal for New Interest Rate Hike for the Fed
The institution warned that new shocks in energy prices and strong demand could prompt central banks to raise interest rates again.
The OECD announced that it expects the US Federal Reserve (Fed) to carry out one more interest rate hike this year.
Interest Rate Expectations by Country
While more limited interest rate hikes are projected in the Euro Area, Australia, and South Korea, additional rate hikes are predicted for Japan.
As for the Bank of England and the Bank of Canada, no interest rate changes are expected for now.
Global Growth and Risk Factors
It was stated that the global growth outlook remains largely the same compared to June, though revisions were made in some countries.
Canada's outlook was revised downward due to trade tensions with the US, and France's outlook due to political uncertainties.
Risks in Artificial Intelligence Investments
The OECD stated that artificial intelligence can boost growth and productivity, but there is a risk that investments might not yield the expected returns.
It was noted that the security industry and low earnings could slow down investments, also affecting connected sectors such as engineering and construction.