OECD secretary general Angel Gurria said there is a growing global inflation risk because many economies are now running at close to full capacity. "There is perhaps a slightly bigger problem of a fear of inflation because industry and the services sector are much closer to full capacity," Gurria told a briefing at the French economic journalists' association. In the past, excess capacity has acted as a buffer which has contained inflation pressures even at a time of high oil prices, he said. But while the recent fall in oil prices is welcome, a renewed surge in oil prices now would have an immediate impact on inflation because of the lack of spare capacity in the world economy, he said. The only country where inflation pressures are not a concern is Japan, where there are still worries about deflation after years of falling prices, he said. The Bank of Japan has to take care about raising interest rates because of the impact this will have on the cost of financing the country's large accumulated debt, he said. Every half percentage point rise in interest rates increases the Japanese fiscal deficit by 1 percentage point, he said Gurria said he sees signs of a "soft landing" in euro zone property markets, which have risen sharply in recent years. He noted that property price rises in Spain slowed to 9.8 pct in 2005, the first time that the rate of increase has been below 10 pct for five or six years. "That suggests that there is a soft landing," he said. With interest rates rising, property prices at high levels and economic growth expected to slow in 2007, there are limits on how much further prices can rise, he said. The slowdown in property price rises may also be a factor behind the expected moderation in growth next year, because growth has been supported in the past by rises in consumer spending linked to increased housing wealth, he said. Gurria said one of the OECD's main tasks now is to become a "hub" for managing economic globalisation. He said global current account imbalances are a risk which could lead to slower economic growth. If investors become more reluctant to finance the growing US current account deficit, this could one day lead to a decline in the dollar which could trigger global interest rate rises and an economic slowdown, he said.