IMF Warns RBA to Hike Rates Further Amid Persistent Inflation Pressures

The International Monetary Fund (IMF) has warned Australia's central bank to be prepared for further interest rate hikes due to persistent underlying inflation pressures and uncertainty over the effectiveness of current financial conditions.

The IMF's warning came in its concluding statement following annual consultations with Treasury, the Reserve Bank of Australia (RBA), and the Australian Prudential Regulation Authority.

The fund downgraded its forecast for Australian economic growth to 1.9% this year and 1.6% in 2027, citing a higher likelihood of another RBA rate increase as the reason for the downgrade.

The IMF also flagged the risk of further large increases in global energy prices pushing up inflation expectations and requiring additional tightening from the RBA.