The International Monetary Fund has backed the potential decision of the Reserve Bank to raise interest rates again.
Sky News business reporter Edward Boyd says the IMF released a “pretty significant” statement in which they revealed growth targets for Australia’s economy heading into 2024.
According to the IMF, they believe “further interest rate rises will be needed” to bring down inflation.
The Reserve Bank will meet next Tuesday to decide whether to raise rates for the 13th time since May 2022.
Mr Boyd said oil prices have been adding to inflation, closing in on $US100 a barrel.
The International Monetary Fund has called on the Reserve Bank to beef up its plan to tackle inflation ahead of this month’s interest rate decision.
A group of staff from the financial agency recently wrapped up their visit to Australia and released a statement detailing their findings.
Australia’s economy is slowing but remains resilient following a strong post-pandemic recovering, according to the report.
However, the country’s headline inflation is too high, owing to soaring rents, labour costs and supply constraints.
“Although inflation is gradually declining, it remains significantly above the RBA’s target and output remains above potential,” the report said.
“Staff therefore recommend further monetary policy tightening to ensure that inflation comes back to the target range by 2025 and minimize the risk of de-anchoring inflation expectations.”
The statement went on to detail the importance of lasting cooperation between the central bank and the federal government to share the “burden” of reducing inflation.
The Opposition has taken aim at the Albanese government in recent months for what it sees as failures to “do its fair share” of the heavy lifting and take pressure off the RBA, despite the delivery of a $22.1 billion surplus earlier this year.
Sky News host Paul Murray says the Albanese government is in a position to ease the cost of living, making life easier and cheaper for Australian families. “Make things cheaper by dropping the fuel excise by 25 cents,” Mr Murray said. “It will cost…
The Washington DC-based body noted all levels of government need to slash spending in three keys areas of health, aged care and the NDIS to promote “economic efficiency”.
It also touched on the ongoing housing crisis.
“The affordability challenge has not abated, as prices have started increasing again and mortgage payments as a share of disposable income have doubled due to higher interest rates,” the report said.
“The authorities have planned a suite of housing policies which, if implemented, would boost supply. Supportive planning and land-use policies are critical.”
Pressure is now mounting on the RBA to raise rates for what would be a fifth time this year after next week’s Board meeting.
Ms Bullock appeared before Senate estimates last week to speak about the bank’s monetary policy. Picture: NCA NewsWire / Martin Ollman
The banks’ newly minted Governor Michele Bullock last week declared the Board “would not hesitate” to increase the cash rate should the inflation remain persistent.
Inflation beat expectations in the last quarter, rising 1.3 per cent in the three months from July to September.
Motorists were faced with a 7.2 per cent increase in fuel prices, while rents increased by 2.2 per cent according to data from the Australian Bureau of Statistics.
Experts remain concerned the RBA has not done enough to get inflation down, as Australians continue to battle with skyrocketing costs for basic items.
(Sky News)
