OECD forecasts rising inflation and further interest rate hikes

The OECD has revised its economic outlook upward, citing persistent energy price increases that are keeping global inflation above central bank targets. In its interim Economic Outlook report, the organization raised inflation forecasts for 2027 across most major economies.

For the G20, inflation is projected to reach 4.1% in 2026, up from 3.4% in 2025, before settling at 3.6% in 2027. This latest figure for 2027 is 0.5 percentage points higher than the June estimate. In the Eurozone, inflation is expected to be 3% this year and 2.9% in 2027, with the 2026 forecast also revised upward by half a percentage point.

Regarding monetary policy, the OECD predicts another interest rate hike from the US Federal Reserve in the fourth quarter of 2026, with rates expected to remain between 4% and 4.25% throughout 2027. The Eurozone is expected to see limited further rate increases. Similar trends are anticipated in Australia and South Korea, while the Bank of Japan is expected to continue its hiking cycle.