NEW YORK (Reuters) - From Seoul to Washington, policymakers are increasingly worried about the outlook for the global economy.
Central banks in Europe and Asia took a more cautious stance on Thursday and Brazil said the deteriorating world economy prompted its surprise rate cut last week.
U.S. Federal Reserve Chairman Ben Bernanke said the central bank would do what it can to boost growth and reduce unemployment, but offered no details on what that would entail.
“It is clear that the recovery from the crisis has been much less robust than we had hoped,” Bernanke told the Economic Club of Minnesota.
It is against this backdrop that finance ministers and central bankers from the Group of Seven industrialized nations will meet on Friday.
They are expected to stress their commitment to preserving the fragile global recovery, but a coordinated plan to calm financial markets is unlikely, officials said.
“The imperative remains to strengthen economic growth,” said U.S. Treasury Secretary Timothy Geithner, as he called on global finance chiefs to act.
Geithner wrote in the Financial Times that a repeat of the massive coordinated fiscal stimulus efforts of 2009 would not be possible this time as the challenges are different.
But the risks of a “longer period of relatively weak growth are significant, and it makes sense for policymakers to reduce the risk of that outcome,” he said.
U.S. President Barack Obama later on Thursday will push for a “very substantial package” of public investments, tax incentives and targeted jobs measures, Geithner said.
Obama is due to address Congress at 7 p.m. EDT (2300 GMT) to unveil his latest plan to kick-start U.S. jobs growth, which has stalled.
U.S. economic data on Thursday again pointed to a weak labor market, with the number of Americans filing new claims for jobless benefits rising unexpectedly.
The outlook for economic growth in developed countries has darkened considerably in the last three months, the Organization for Economic Co-operation and Development said. It urged central banks to keep rates low and be prepared to do more to support growth.
“One would say that growth is stagnating,” said OECD Chief Economist Pier Carlo Padoan.
In the euro zone, the European Central Bank held rates steady and signaled it is in no hurry to raise them, saying inflation risks are no longer skewed to the upside and that economic growth in the region will be slow at best.
Europe is still struggling to convince markets it has the political will needed to tackle its debt problems.
Britain’s central bank left interest rates at a record low 0.5 percent for the 30th straight month, leaving open the possibility that it may restart its quantitative easing program should the economy weaken further
South Korea, Indonesia, Malaysia and the Philippines were in wait-and-see-mode, pausing in their fight against inflation while they assess how much a slowdown in U.S. and European growth will hurt their economies.
In minutes from its August 30-31 policy meeting, Brazil’s central bank focused more on problems abroad than recent signs of a sharper-than-expected economic slowdown in Brazil, Latin America’s largest economy. The bank also said price pressures were receding due to falling commodities prices.
U.S. central bankers, in speeches and interviews over the past weeks, appeared to be laying the groundwork for a possible further easing of monetary policy.
Markets widely expect the Fed to do more to support the economy, with some thinking the central bank’s policy-setting committee could announce new measures as soon as its September 20-21 meeting.
The OECD forecast growth across the G7 group of major industrialized economies would average 1.6 percent on an annualized basis in the third quarter before slowing to just 0.2 percent in the final three months of the year.
The slowdown would hit Germany particularly hard, with the OECD forecasting that Europe’s biggest economy would see annualized growth of 2.6 percent in the third quarter before contracting 1.4 percent in the fourth.
The U.S. economy, meanwhile, would register annualized growth of 1.1 percent in the third quarter and slow to 0.4 percent in the fourth quarter, the OECD said.
Editing by Chizu Nomiyama and Dan Grebler