“The US and Japan “have yet to produce credible medium-term plans” to stabilise their debt, while other countries need to provide more clarity on how their fiscal consolidation targets will be met, according to the Organisation for Economic Cooperation and Development’s 2011 Economic Outlook, which says that risks to the global recovery remain significant.
The Federal Reserve should consider raising interest rates, while the European Central Bank should hold off on further tightening, the report advised.
A two-speed recovery where emerging markets outpace developed markets is causing capital to flow into non-OECD economies and this is creating inflationary pressures and prompting policy restraint which threatens to endanger the global recovery, the OECD said.”
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