The IMF recommends the Reserve Bank of Australia raise interest rates even higher

<p>The International Monetary Fund's latest report on Australia is forecasting inflation to return to the target range of 2-3% only in 2026. This is later than the Reserve Bank of Australia's projection of December 2025.</p><ul><li>IMF said interest rates were tightening financial conditions in Australia, but rate rises in Oz had been behind other developed market economies</li><li>Australia’s inflation was falling slowly</li><li>services inflation
remained high</li><li>jobs market is still tight, this could further slow the drop in inflation</li></ul><p>“Monetary policy
should be tightened further to ensure inflation comes back to target
earlier than 2026 projected in the baseline” </p><p>it argued.</p><p>***</p><p>The Reserve Bank of Australia next meet on February 5 and 6. Ahead of that meeting is the latest official quarterly CPI data. This will set the tome for the meeting. Recent data from Australia shows that:</p><p>Inflation picked up in December according to a private survey:</p><ul><li><a href="https://www.forexlive.com/news/australian-private-survey-of-inflation-soared-by-1-mm-in-december-the-most-in-17-months-20240115/" target="_blank" rel="follow" data-article-link="true">Australian private survey of inflation soared by 1% m/m in December, the most in 17 months</a></li></ul><p>The jobs market is showing some signs of slowing:</p><ul><li><a href="https://www.forexlive.com/news/australia-dec-employment-651k-expected-176k-unemployment-rate-39-exp-39-20240118/" target="_blank" rel="follow" data-article-link="true">Australia Dec. Employment -65.1K (expected +17.6K) Unemployment rate 3.9% (exp 3.9%)</a></li></ul>

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