IMF warns of rate hike risk as it cuts Australia's growth forecast to 1.6%
The IMF cut Australia's 2027 growth forecast to 1.6 per cent and warned of possible RBA rate hikes.
The International Monetary Fund downgraded Australia's 2027 economic growth forecast from 1.7 per cent to 1.6 per cent, citing persistent inflation and weak productivity growth. The IMF predicted 1.9 per cent growth for 2026.
The downgrade reflects higher risk of further RBA rate rises to control price pressures. Global oil prices have surged: Brent crude has climbed above US$108 a barrel, a 35 per cent jump since August began, driven by Middle East conflict.
Financial markets now price an 80 per cent chance of an RBA rate hike on 29 September. The IMF called on federal and state governments to tighten budgets to address rising debt and inflation.
It backed Labor's changes to capital gains tax and negative gearing as steps to reduce housing distortions, and welcomed efforts to boost housing supply, though it urged more action on affordability.
- 1.6 per cent
- 2027 growth forecast
- 35 per cent since August
- Brent crude price jump
- 80 per cent on 29 September
- RBA rate hike probability
- above US$108 a barrel
- Brent crude level
Why it mattersA slower economy and higher interest rates mean slower wage growth, higher mortgage costs, and more pressure on household budgets and business investment.
AustraliaAustralians face the real prospect of further interest rate rises that will increase mortgage repayments and reduce borrowing capacity. Higher energy costs will push up electricity and petrol prices. Economic growth is slowing, which may affect job creation and wage increases.
✓ Claims checked against the source. checked 8 d ago
