OECD warns 2027 inflation will exceed forecasts, requiring more rate hikes

  • OECD raised 2027 inflation forecasts across nearly all Group-of-20 economies.
  • 2027 consumer-price projections increased for every G-20 economy except China and Saudi Arabia.
  • OECD expects further rate increases in the United States, euro area, Australia, South Korea and Japan.

Global inflation is set to run faster than previously forecast in 2027, the OECD said, raising the prospect of additional interest-rate increases from the United States to Australia. The Paris-based organization lifted its consumer-price projections from June for every Group-of-20 economy except China and Saudi Arabia, as renewed energy-price shocks and stronger-than-expected demand keep inflation above target in many economies. OECD Chief Economist Stefano Scarpetta said central banks need to remain highly vigilant and may have to act more forcefully than they did in 2022. The OECD expects one more Federal Reserve hike this year, further modest increases in the euro area, Australia and South Korea, and additional rate increases in Japan, while it expects the Bank of England and Bank of Canada to hold rates for now. Global growth forecasts were little changed from June, although the outlooks for Canada and France were downgraded. The report also warned about fiscal pressures, artificial-intelligence investment risks, leverage and complex financing, which could weaken investment and financial-market valuations.

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