ECB must do more, says OECD
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The European Central Bank should follow its recent interest rate cut with more radical action to tackle recession and record unemployment, the OECD said Wednesday as it slashed its forecast for the eurozone economy.
The Organization for Economic Co-operation and Development said it expected gross domestic product in the eurozone to contract by 0.6% in 2013, compared with its previous forecast for a fall of 0.1%.
The OECD is slightly more pessimistic about the prospects for the eurozone than the IMF, which sees a 0.3% decline, the European Commission, which projects a 0.4% decline, and the ECB with its 0.5% drop. The recession has already lasted for 18 months, marking the longest period of contraction in activity since the euro was launched in 1999.
While welcoming the central bank's move to cut its main interest rate to a record low of 0.5% earlier this month, the OECD said it should take advantage of downward pressure on prices to take bold steps or risk contributing to stagnation with negative implications for world growth.
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