Thursday, October 27, 2011

After Europe is "Saved", OECD Says Europe Should Now Lower Interest Rates

After Europe was "saved" last night, Angel Gurria, Secretary-General of the Organization for Economic Cooperation and Development (OECD), said the European Central Bank (ECB) should cut benchmark interest rates in the euro zone to indicate that it is interested in stimulating the economy. He also said the plan announced by the European Union to contain the crisis of sovereign debt in the region is a "positive step".

According to GurrĂ­a, the measures will help curb the problems that beset Europe in the short term, but the region's governments also need to find solutions for the longer term, as improvements in education, incentives for innovation and greater flexibility of labor markets.

He said the measures could lead to a truce with the market. "There were three issues to be resolved and the three issues were addressed. May not be the end of the matter, but it was a good day," said Gurria.

The three problems he cited are Greece's debt, the possibility of contagion from other countries and capitalization of banks. Gurria said that China and other European countries should buy bonds "not as an aid but as investment decision." "Europe is a good investment.".

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