OECD calls for further rate cuts

The Organisation for Economic Co-operation and Development (OECD) has called on both governments and central banks to inject more cash into their economies, in order to revive domestic spending and help fend off the recession that has been classified as the worst in over 25 years.

The OECD’s latest projections indicate for a very bleak future due to the increased instability of the labour market, as well as when the uncertainty over the economy will end with predictions signalling the end of 2009 at best.

The OECD chief economist, Klaus Schmidt-Hebbel, has supported the view of the International Monetary Fund in that in a period of spiralling depression, additional focus must be placed on macroeconomic stimuli.

The central banks have greater leeway than ever to bring in more tax breaks, as well as to keep cutting rates in both the short and medium term.

With continued easing of monetary policy, it is the best manner to fight off deflation.

The OECD report has revealed the sheer scale of the crisis as the worst since the 1980s and thus far, the jobless total in the 30-member group is predicted to increase by 8 million by 2010.

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