OECD Sees Window of Opportunity on Stimulus Amid Trump BoostBy
The Organization for Economic Cooperation and Development is urging rich countries’ governments to seize the chance to boost growth through fiscal stimulus before rising interest rates make such moves too costly.
“We’ve been talking about using the fiscal instrument for some time but we want to emphasize that there is a window of opportunity provided by monetary policy today that allows governments to borrow at low interest rates,” Chief Economist Catherine Mann said in an interview in Paris. “That was not necessarily true two years ago and it may not be true in two years time. This opportunity should be taken while it’s available.”
The S&P 500 Index has risen to a record high and bond yields have increased on expectations that U.S. President-elect Donald Trump will put in place tax cuts that will spur growth in the nation’s economy once he takes power in January.
Speaking ahead of the release of the OECD’s semi-annual global economic outlook Monday, Mann said that fiscal stimulus in the right areas, combined with structural reforms, could boost growth enough to actually lower debt burdens in many developed countries.
“We believe there is more room for stimulus than most governments do,” she said.