IMF Warns RBA to Be Ready to Raise Rates Again Amid Persistent Inflation Pressures

The International Monetary Fund (IMF) is urging the Reserve Bank of Australia (RBA) to be prepared to raise interest rates again if necessary. The IMF's main priority for Australia is to get inflation back within its target band of 2-3%. The fund warns that underlying price pressures remain persistent and that there is uncertainty about how tight economic conditions really are.

The IMF has trimmed its growth projection for Australia, reducing it to 1.9% this year from 2% in April, and 1.6% next year from 1.7%. The RBA has already raised rates three times since February, but held the cash rate at 4.35% at its last two meetings.

The IMF notes that Australia started the year from a strong position, but warns of potential risks including a fresh surge in global energy prices, which could feed through to the economy and lift inflation expectations.