Central banks should be certain they have beaten inflation before cutting interest rates this year, the Organisation for Economic Co-operation and Development (OECD) said despite revisions to its outlook that showed inflation was falling at a faster rate than previously expected.
The Paris-based organisation, which represents 38 countries, said it was “too soon to be sure that underlying price pressures are fully contained”.
It warned that inflation in the UK would persist at the highest level in the G7 this year, forecasting a rate of 2.8%, despite sharp declines in the headline rate in recent months amid cooling global energy prices. The US inflation rate in 2024 would be 2.2%, down from a previous forecast of 2.8%.
“Monetary policy needs to remain prudent, that is restrictive, for some time to come to ensure inflationary pressures are contained,” said Mathias Cormann, the secretary general of the OECD.
However, in a shot across the bows of central banks considering…