OECD recommends eurozone cuts

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In its twice-yearly report on the outlook of the global economy, the Organization for Economic Co-operation and Development called Tuesday for eurozone interest rates to be reduced by 0.5 percent. This contradicts the position taken by the European Central Bank, which insists that a drop in interest rates would be harmful, is not supported by sensible economists, and that interest rates should in fact be raised. It may be difficult for the ECB to maintain this position in the face of support for the OECD position from Italian ministers as well as from the German minister for economics and labour. The OECD came to its conclusion after determining that the lack of recovery in the eurozone economies could not be completely explained by external factors such as high oil prices and the war in Iraq. In addressing other economic issues, the OECD report cut its growth forecasts for all leading economies, putting the blame on imbalances between global economies. It also predicted that the US would see its current account deficit grow to $900 billion (715 billion) next year.