“Global economic prospects continue to worsen markedly, especially for many advanced economies,” Citigroup economists led by Willem Buiter wrote in a note to investors. “At this stage our base case is for a long period of low policy rates and we do not expect” the U.S. Federal Reserve, the European Central Bank or Bank of England “to hike rates before 2013,” the economists wrote. The Bank of Japan may not raise rates until 2014, they said.

The global economy is cooling as governments from Europe to the U.S. introduce austerity measures to reduce budget deficits and unemployment restrains consumer spending. There’s a “very high” probability that the U.S. economy will go back into recession, Nobel-prize winning economist Joseph Stiglitz said today. The Fed has already pledged to keep its benchmark rate near zero for another two years to help stimulate growth in the world’s largest economy.

Societe Generale SA said today the Fed is “set to stay on hold until early 2015,” and it doesn’t expect any rate increases from the Bank of England and the ECB before 2013.

Forecasts Cut

Citigroup cut its estimate for global economic expansion this year to 3.1 percent from 3.4 percent and lowered its 2012 forecast to 3.2 percent from 3.7 percent. “This is the seventh- biggest monthly cut in Citi’s global growth forecasts over the last 10 years,” the economists said.

Economists at UBS AG also lowered their 2012 global growth forecast to 3.3 percent from 3.8 percent while leaving their estimate for 2011 unchanged at 3.3 percent.

“We do not believe that the U.S. or wider world economy will re-enter recession,” UBS economists said in a note to clients. “Growth may be stuttering, but is not failing.”

The ECB has lifted its benchmark rate twice this year to 1.5 percent to fight inflation, even as the region’s debt crisis worsens. The Bank of England’s key rate is at 0.5 percent and Japan’s is between zero and 0.1 percent.

Citigroup said further monetary tightening is unlikely in China, where the central bank has raised its key rate five times since September.