IMF tells the RBA to hike interest rates higher, and hold 'em high for longer

<p><a href="https://www.imf.org/en/News/Articles/2023/10/31/cs103123-australia-staff-concluding-statement-of-the-2023-article-iv" target="_blank" rel="nofollow">International Monetary Fund (IMF) issued its annual report into the Australian economy</a>. It warned that although inflation was easing, it was still too high. The IMF urged the RBA to hike rates:</p><ul><li> “Although inflation is gradually declining, it remains significantly above the RBA’s target and output remains above potential,” </li><li>“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.”</li></ul><p>Also weighed in on fiscal policy:</p><ul><li> “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,” </li></ul><p>The IMF had more recommendations, tax reform and what have you. </p><p>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. </p>

This article was written by Eamonn Sheridan at www.forexlive.com.