In a report on Australia’s economy, IMF highlighted concerns about persistent inflation levels in the country. Even though inflation is “gradually declining”, it continues to hover “significantly above” RBA’s target, with the country’s output “remains above potential.”
The IMF staff “recommend further monetary policy tightening”. They believe this approach will realign inflation with RBA’s target range by 2025 and “minimize the risk of de-anchoring inflation expectations.”
In terms of economic momentum, the IMF predicts a further slowdown in the near future, coinciding with a steady decrease in inflation. While risks to growth appears “broadly balanced”, the potential for inflation to surpass expectations remains a cause for concern.