"With domestic demand sluggish, resilience feeble and possible upward pressures on the euro looming ahead, the balance of risks on growth and inflation is clearly tilted to the downside, calling for an early easing of monetary policy."Analysts doubt that the ECB will have to cut rates. Klaus Liebscher criticized the OECD's remarks. The OECD is concerned about the outlook for the dollar and the volatility of oil prices. The likelihood of a sudden sharp drop in the value of the dollar was increasing but this was not the most probable scenario. The United States urgently needs to correct its current account deficit and protect other world economies from an abrupt dollar decline. The OECD expects the ECB to lift interest rates to 2.25% by late 2006. Its U.S. growth forecasts, of 3.6% for 2005 and 3.3% for 2006, are based on the assumption that the Federal Funds target rate will increase "incrementally" to 4.75% around mid-2006 from 3.0% now. The OECD assumes Japan's rates will remain at zero until the end of 2006 and forecasts that Japan's economy will only grow at 1.5% in 2005. The OECD slashed its growth forecast for the euro zone to 1.2% for 2005 on the assumption of a 50 basis point cut in mid-2005. The report was especially gloomy about Italy, forecasting that the economy would shrink 0.6% this year. British interest rates, which have already been raised by 1.25 percentage points from their July 2003 low, are expected to stay unchanged at 4.75%. While increases in oil prices led to a slowdown in growth in 2004, the OECD said it was assuming the price of a barrel of Brent crude oil would fall from $51 in the second quarter of 2005 to $48 at the end of 2006.