„Equity prices have been volatile in recent weeks, as was the case last spring, but to some extent this may reflect a measure of normalization in the pricing of risk,” the Paris-based agency’s chief economist, Jean-Philippe Cotis, said today. „On the whole, financing conditions are still favorable.”
The remarks by Cotis echo those of central bankers Ben S. Bernanke and Jean-Claude Trichet that the global economy can weather the slump. Global equities are recovering from a sell-off that erased $3.3 trillion in market value from February 27 through March 5, triggered by a decline in Chinese stocks and concern US economic growth is slowing.
Cotis said US core inflation is „too high for comfort,” though with growth „subdued,” he saw no case for an interest rate increase by the US Federal Reserve. In the 13 euro nations, price pressures are „benign.” He said the Bank of Japan should hold off on raising interest rates until inflation is „fairly positive.”
Growth in the G-7 industrialized nations will be 0.5% in the first quarter and 0.6% in the second, the OECD predicted. The OECD, which comprises 30 nations, didn’t issue updated 2007 growth estimates. It currently sees a US expansion of 2.4%, growth in the euro region of 2.2% and 2% growth in Japan. (Bloomberg)
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