The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

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May 23, 2006

OECD To FOMC: Keep On Going

From the Organisation for Economic Co-operation and Development's latest Economic Outlook -- hat-tip for the tip-off to Dutch Book Partners' Stan Jonas -- a vote for "no pause":

For economies already close to full employment, such as the United States, the possibility of a prolonged imported inflation shock, coupled with an upward drift in inflation expectations, may tilt the balance towards further tightening.

In the U.S. country survey, the advice is a bit more direct:

The stance of monetary policy, currently near neutral, needs to tighten slightly to keep the economy in balance.

The good folks at the OECD are less convinced that the recent hawkish talk from the ECB ought to be followed up with action:

For the euro area, where wages and unit labour costs are increasing slowly, the starting point is one where slack is substantial and thus a source of falling inflation. At the same time, if commodity price pressures persist and as evidence builds up that the recovery is firming, the need for monetary tightening should become clearer. Its actual pace, however, should be conditional on unambiguous signs that economic slack is shrinking, which hard data is not as yet confirming.

There you have it.

In related blog-stories: Jasper Emmering has a more in-depth review of the OECB report, at A Fistful of EurosTim Duy still sees a pause in the works, but his resolve is weakening.

May 23, 2006 in Europe , Federal Reserve and Monetary Policy | Permalink


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