OECD hikes US growth forecast to 2.6%

The world's largest economy should see a modest pick up from the second quarter as interest rates remain low, the OECD said on Wednesday, raising its US 2011 growth forecast to 2.6 percent from 2.2 percent. "Growth in the United States is expected to pick up modestly from the second quarter of 2011, supported by accommodative monetary policy and favourable financial conditions," said the Organisation for Economic Cooperation and Development. It said it expects the effects of high commodity prices plus weaknesses in labour and property markets and household balance sheets to fade gradually. "Nonetheless, the momentum of the recovery is likely to remain muted, with a modest drag on activity from fiscal consolidation in 2012," the OECD said in its latest twice-yearly Economic Outlook report. It held its US 2012 growth forecast at 3.1 percent. It lowered its unemployment rate forecast for this year to 8.8 percent from 9.5 percent, and its 2012 jobless rate to 7.9 percent from 8.7 percent. However it now expects 2011 inflation to hit 1.9 percent compared to the 0.9 percent it forecast last November. The OECD raised its 2012 inflation forecast for the United States to 1.3 percent from 0.9 percent.