Australia faces further rate hikes as inflation outpaces most developed economies
The IMF projects Australia’s inflation to stay above the Reserve Bank’s target through 2027, keeping the prospect of additional rate hikes alive.
According to the IMF’s latest World Economic Outlook, Australia will rank among the top six developed nations with the highest inflation through 2027, staying above the Reserve Bank’s 2-3% target range. The central bank’s September board minutes revealed unanimous support for lifting the cash rate to 4.6%, a 15-year peak, and warned that ongoing global supply disruptions—from Middle-East conflict to AI-driven demand and a strong El Niño—could force higher unemployment and slower growth.
The RBA signaled willingness to increase rates further if needed. ANZ’s Adam Boyton described the minutes as hawkish, while NAB’s Gareth Spence noted that higher fuel prices and interest rates have pushed business confidence sharply lower.
Why it matters
Higher Australian inflation may trigger more rate hikes, affecting borrowing costs and economic growth.
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