Despite stronger-than-expected growth, the OECD said inflation is on course to fall back to the rates targeted by leading central banks, opening the way for cuts in borrowing costs later this year. However, the OECD warned that the brighter outlook for the global economy would be disrupted by a widening of the Middle East conflict. Much of the surprising strength in the global economy has come from the U.S., where the OECD now sees growth of 2.6% this year, having previously forecast an expansion of 2.1%. It forecast that the European Central Bank will lower its key rate to 2.5% by the end of next year from 4% now, while the Bank of Japan is expected to raise its key rate to 0.75% over the same period. The OECD also raised its growth forecast for China, to 4.9% this year from 4.7% previously, in anticipation of further stimulus from the government.

Source: Wall Street Journal May 02, 2024 09:06 UTC