IMF Urges Tighter Australian Spending to Contain Debt and Inflation

The International Monetary Fund warned that Australia’s federal and state governments should impose tighter spending controls to contain debt and help ease persistent inflation. It said the Reserve Bank of Australia may need to raise interest rates further if energy-price increases intensify inflation expectations, even as policymakers try to avoid a sharp economic slowdown. The IMF forecasts 1.9% economic growth this year but cut its 2027 real GDP projection by 0.1 percentage points to 1.6%, citing the increased likelihood of additional monetary tightening, weak productivity and global uncertainty. Rising oil prices linked to conflict in the Middle East are adding to pressure on Australian fuel costs and household budgets. The assessment increases pressure on Treasurer Jim Chalmers to demonstrate progress on living standards while balancing fiscal restraint against the economic costs of higher borrowing rates.