OECD adjusts economic forecast on national economies

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The Paris-based Organization for Economic Cooperation and Development said on Tuesday that its advice to the US Federal Reserve is to ease up on its course of interest rate hikes in the wake of Hurricane Katrina and all the devastation and disruptions the storm has caused. The advice came as the OECD issued new assessments for the economic growth of its member nations. The group chose to keep its prediction for growth in the US economy at 3.6 percent for the year, despite the possible effects of Katrina, because it said that it is impossible at the moment to tell exactly how deep and widespread those effects will be. The OECD cut its forecast for the growth of the British economy from 2.4 percent to 1.9 percent for the year, and said that the Bank of England still has room to cut interest rates there as long as inflation remains under control. In addition, the group raised its forecast for the eurozone slightly, from 1.2 percent to 1.3 percent growth this year while remaining cautious about economic recovery in the region. The OECD also raised its prediction for growth in Italy from minus 0.6 percent to 0.2 percent and said that it believes Frances economy will grow by 1.6 percent this year rather than by the 1.4 percent it predicted previously. However, its prediction for growth in the German economy was lowered from 1.2 percent to 1.0 percent for 2005.