The OECD is raising its inflation forecast

Fuel prices

The consequences of the pandemic will still be felt in the coming year.

(Photo: dpa)

Frankfurt The OECD has raised its inflation forecast for the G20 countries. It now expects consumer prices to rise 3.7 percent throughout 2021 and 3.9 percent in 2022. For the coming year in particular, the OECD has raised its forecast significantly compared to the forecast from May – by half a percentage point. For the euro zone, it forecasts inflation of 1.5 percent for 2022, and 1.9 percent for Germany; these values ​​are also higher than in May.

At the same time, however, it assumes that the current peak values ​​will decline. At the end of 2021, she expects prices in the G20 countries to be 4.5 percent above the previous year’s level. Twelve months later, only a value of 3.5 percent.

The consequences of the pandemic will therefore still be felt in the coming year, but will also decline due to the elimination of base effects in the statistics.

“The pressure on the supply side should gradually decrease,” it says with a view to delivery bottlenecks. At the same time, the Paris-based organization expects only a moderate increase in wages. “Inflation expectations are still anchored, but there is a risk in the short term,” it said.

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The organization recommends maintaining financial and monetary policy support. At the same time, it calls for clear concepts for normalizing monetary policy: first, emergency measures should be withdrawn, then balance sheets should be stabilized, and then interest rates should be increased. Without a clear announcement, it is said that there could be significant price reactions on the capital markets.

These forecasts and recommendations are based on the scenario of a continued but gradually slowing economic recovery. The OECD estimates global growth to be slightly below its May forecast at 5.7 percent for 2021 and 4.5 percent for 2022.

More: BIS thinks loose monetary policy is okay despite inflation.

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