The OECD is calling on the central banks of the Western nations to keep interest rates high, regardless of the disastrous effect this is having on the physical economy. The OECD’s recommendations were clearly timed to coincide with today’s conclusion of this month’s Fed FOMC meeting, which decided to keep interest rates high, as most financial commentators had expected.
According to an account in the Financial Times, “Central banks must keep interest rates high until inflation is tamed, says OECD … [which] sees no case for monetary easing in rich nations despite economic strains and trading tensions.… OECD chief economist Clare Lombardelli said that even in the U.S. it was still ‘far too early to declare victory’ in the battle to tame price pressures and cut rates.… Central banks should hold interest rates at their current high levels or raise them further to defeat inflation, the OECD said, despite `increasingly visible’ signs of economic strains and protectionism across the world.”
