The Organization for Economic Co-operation and Development says the U.S. and other recovering countries should raise interest rates.

In a statement issued after a ministerial council meeting in Paris, it said: “Ministers recognized that interest rates need to rise in countries furthest into recovery. This should not disturb markets given that their rates are currently low. A tighter monetary stance is necessary in order to safeguard the low inflation needed for strong, sustained growth.”

“In other countries, notably Japan and some in the euro area, there is a continued need for relaxed monetary conditions,” the statement said.

Most countries should be tightening fiscal policy too, according to the organization. “Expansionary fiscal policies helped to overcome the recession, but deficits now need to be rolled back, especially given the growing aging-related pressures on public spending,” it said. “Ministers differed on whether fiscal consolidation should depend on a recovery in activity and whether structural reform would be eased by delaying consolidation.”

Nevertheless, the ministers more or less agreed on the need for structural reform, particularly in continental Europe and Japan. They concluded that social security programs should not encourage older workers to leave the labour force.

“Ministers recognized that retirement patterns, which are driven to a large extent by counter-productive policies, must change. In a number of societies, reforms are underway, but most countries need to go further in reforming their pensions and other benefit systems. Linking pension levels and retirement ages to life expectancy would make pension systems more robust,” it said.

The OECD also stressed that private pension arrangements need appropriate regulation to ensure that their coverage is wide and that the risks are well understood. Higher productivity would help preserve overall growth in aging societies, it said.

The statement cited a number of risks to the outlook, including high oil prices, but said it was confident the risk could be handled provided that prices do not rise much further.