The “last mile” in Australia’s inflation battle is proving more drawn-out than expected, the IMF has found, raising the possibility of another rate rise.
Interest rates may need to stay high or rise again if Australia’s progress stalls on curbing price rises according to the International Monetary Fund as it warns Treasurer Jim Chalmers that government spending must work in line with the Reserve Bank’s aims to bring down inflation.
Chalmers, who has denied government spending is fuelling inflation, said the IMF’s findings backed the government’s economic management, including its back-to-back surpluses.“The IMF recognises we did this by banking revenue upgrades and restraining spending at the same time as providing cost-of-living relief for people under pressure,” he said.
The RBA has kept interest rates on hold at 4.35 per cent since November last year, and governor Michele Bullock has said a rate cut before Christmas is “not aligned with the board’s current thinking”., although all except Canada still have a higher cash rate than Australia.
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