The Organization for Economic Co-operation and Development (OECD) on Tuesday projected an inflation decline in G20 economies to 2.5% by 2027 from the current 3.4%, with most major economies expected to bring inflation back to target levels by mid-2027.

However, the report highlights the increasing divergence in monetary policies across the world's largest economies. The European Central Bank (ECB) is expected to cut interest rates 5-6 times throughout 2025, as inflationary pressures in the eurozone ease. Meanwhile, several Asian countries may reduce rates by as much as 75 to 100 basis points in an effort to stimulate growth amid softening economic conditions. The Federal Reserve, on the other hand, faces a critical decision in January, with the possibility of pausing interest rate cuts sparking widespread market speculation. 

As inflationary pressures subside, the OECD notes that global public debt remains a significant concern. The organization predicts that the average public debt-to-GDP ratio across OECD countries will climb to 113% by 2027. The U.S., in particular, is facing mounting debt challenges, with its national debt surpassing $36 trillion, leading to increasing concerns about the sustainability of fiscal policy and growing interest payment pressures.