OECD Warns of Faster Inflation Ahead of Potential Rate Hikes

The Organisation for Economic Co-operation and Development (OECD) has released a report warning that inflation will be faster than forecast in 2027, necessitating more tightening from central banks globally. The OECD raised its projections for consumer-price growth in every Group-of-20 economy apart from China and Saudi Arabia.

The report noted that the economic impact of the Middle East war unleashed by US President Donald Trump is now set to endure into the second half of his term in office. Central banks may need to respond with more interest rate hikes, particularly as inflation is already above target in many economies.

The OECD officials predict one more hike this year by the Federal Reserve and further modest increases in the euro area, Australia, and South Korea. By contrast, the Bank of England and the Bank of Canada are expected to keep rates steady for now.