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The International Monetary Fund (IMF) has urged the RBA to maintain a tight stance of monetary policy in its latest statement on policy recommendations.
“Australia is facing the highest underlying inflation in more than a decade,” the IMF said.
While the IMF shared the RBA view that economic activity was starting to slow, it said the jump in commodity prices, sizable immigration flows, and the increase in state infrastructure expenditure could offset the impact of weaker consumer and business confidence.
“With the risks to inflation on the upside, the RBA should be prepared to tighten quickly if leading indicators suggest that domestic demand will not slow as expected or the outlook for inflation deteriorates," the IMF statement said.
Published: 10-07-08
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