The OECD has urged the European Central Bank to cut interest rates, even as it said it expected the recovery in advanced economies to accelerate this year.
In its twice-yearly economic outlook, the Paris-based club of mostly rich nations called on the ECB to loosen policy even further “to move inflation more decisively towards target” and to be prepared to adopt unconventional measures such as negative interest rates or quantitative easing to prevent a slide into deflation.
“The ECB’s main refinancing policy rate should be reduced to zero, and possibly the deposit rate to a slightly negative level, and they should be maintained at these levels at least until end 2015,” the OECD said. The central bank’s governing council meets this week in Brussels, but analysts ex-pect no policy change in an announcement tomorrow.