The Organization for Economic Cooperation and Development issued its statement on the global economy and said that Japan’s economy is likely to grow slower than anticipated, despite the BOJ’s numerous efforts to stimulate the economy. The OECD also said that the European Central Bank, especially, must redouble its efforts to get out the now prolonged period of stagnation otherwise it is in jeopardy of increased deflation. The report further recognizes that the divergence of the BOJ and ECB relative to the other major central banks, specifically the Federal Reserve and the Bank of England, is likely to lead to volatility in the FX markets.
With easing already anticipated from the ECB, the Euro has been under near relentless pressure; as reported at 10:18 a.m. (GMT) in London, the EUR/USD was trading lower at $1.2437, while the EUR/JPY was trading at 146.9135 Yen, a loss of about 0.22%. The USD/JPY pair was trading at 118.1325 Yen.
Global Growth Outlook
The OECD does expect that the global economy, overall, is likely to improve within the next two years, about 3.7% next year and 3.9% in 2016. Japan’s growth is likely to drop by 0.8% in 2015. In contrast, the U.S. economy could grow by 3.1% next year and the U.K. economy by 2.7% in the same timeframe.