Rising oil prices have had only a limited impact on core inflation and wages in the world's major economies, the Organisation for Economic Cooperation and Development (OECD) said today.
In its interim economic review, the OECD cut its forecast for 2004 economic growth in the United States to 4.3 per cent but raised that for the euro zone to 2 per cent and for Japan to 4.4 per cent.
"Thus far, the negative impact of oil market turbulence has therefore been of limited magnitude," Mr Jean-Philippe Cotis, chief economist at the Paris-based OECD, said in a written statement.
Mr Cotis noted that, on the back of the continuing recovery, several central banks including the US Federal Reserve had started to move away from the policy of lowering interest rates to stimulate economic recovery.
"However - except perhaps in the United Kingdom, where the central bank has rightly been proactive in raising rates - return to neutrality is not a matter of urgency," Mr Cotis said.
"The current wait-and-see monetary stance observed in Japan and the euro-area seems warranted," he said. The OECD cut its economic growth forecast for the United States from an earlier forecast of 4.7 per cent.
"Household confidence is affected by sub-par pace of job creation recorded to date, but remains around its long-run historical average, boding well for the resilience of consumption," Mr Cotis said.
The OECD raised its 2004 growth forecast for the euro area, saying the 12-nation zone would grow by 2 per cent, compared with 1.6 per cent expected previously.
Germany is set to grow 1.7 per cent this year (compared to 1.1 per cent seen before), while France would grow by 2.7 per cent (up from a 2 per cent forecast), and Britain is seen growing 3.4 per cent compared to the previously expect 3.1 per cent, the OECD said.
Japan is seen growing 4.4 per cent this year, up from an earlier forecast of 3.0 per cent, and Italy is set to grow 1.3 per cent, up from an earlier forecast of 0.9 per cent.