OECD warns of 'protracted and slow' recovery
AMERICA'S economy will continue to improve but the speed of its recovery from recession will be moderate as it grapples with high levels of unemployment and mortgage default.
An analysis released yesterday by the Organisation for Economic Co-operation and Development (OECD) said the pace of America's rebound from its most severe recession since the Great Depression 80 years ago was likely to be "slow and protracted".
In its US 2010 economic survey, the OECD said the Federal Reserve's decision to keep an "accommodative stance of monetary policy" was the right one while the economy remained weak. But the Fed should continue its moves towards withdrawing this support, it said.
America's central bank has promised repeatedly to keep interest rates at 0-0.25pc for a "prolonged period" but it has started to pull its short-term liquidity programmes and raise the rate at which it lends to distressed banks.
The Fed's board will report today on its plans for stimulating the economy.
Unemployment was at 9.6pc in August, up 0.1pc on July. The unemployment rate was 5pc when America's recession started in December 2007, but the OECD said it could be early 2013 before it returns to these levels.
This is bad news for the White House, which has been criticised by Republicans for failing to cut the jobless rate despite a $787bn (€602bn) stimulus package introduced in February last year. (© Bloomberg)