The European Central Bank will have to raise its key interest rate much further if it is to bring down persistently high inflation, the OECD said
has overtaken that in the U.S. and the bloc’s common currency has lost ground against the dollar.
The OECD estimates that in the three months through September, real wages were more than 2% lower than a year earlier in the U.S., the U.K. and Italy, and more than 4% lower in Germany, as wage gains have failed to keep up with rising prices. However, the OECD expects the German and British economies to contract next year, while it forecasts growth of 0.5% in the U.S. By contrast, it expects China’s economy to accelerate after a weak 2022, although that will depend on the easing of“If strict lockdowns were to continue and affect a big chunk of the Chinese economy, the risk is they’ll grow even less,” Mr. Pereira said.Is the European Central Bank doing enough to tackle inflation? Why or why not? Join the conversation below.
“We are more concerned about winter 23/24 than winter right now,” said Mr. Pereira. “The main message is that the energy crisis is here to stay.”
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