International Monetary Fund (IMF) issued its annual report into the Australian economy. It warned that although inflation was easing, it was still too high. The IMF urged the RBA to hike rates:
- “Although inflation is gradually declining, it remains significantly above the RBA’s target and output remains above potential,”
- “Staff therefore recommend further monetary policy tightening to ensure that inflation comes back to the target range by 2025 and minimise the risk of de-anchoring inflation expectations.”
Also weighed in on fiscal policy:
- “The Commonwealth government and state and territory governments should implement public investment projects at a more measured and co-ordinated pace, given supply constraints, to alleviate inflationary pressures and support the RBA’s disinflation efforts,”
The IMF had more recommendations, tax reform and what have you.
I don’t have a lot of time for the IMF, they are normally far behind the curve. But, in this case, the RBA is behind on inflation too. The Bank meet on November 7 and a 25bp rate hike is widely expected.