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Economics

Australia Should Keep Tightening Policy to Cool Demand, IMF Says

  • IMF sees economy avoiding recession, highlights downside risks
  • Points to potential for fall in property prices to accelerate
Australia’s high household debt and large share of mortgages on variable rates or resetting to them soon points to relatively strong transmission.

Australia’s high household debt and large share of mortgages on variable rates or resetting to them soon points to relatively strong transmission.

Photographer: Brent Lewin/Bloomberg
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Australia should keep tightening monetary and fiscal policy to help cool domestic demand and keep inflation expectations in check, the International Monetary Fund said. 

“Monetary policy needs to be focused first and foremost on keeping inflation expectations well anchored, which clearly points to more tightening in the short term,” IMF staff said in their concluding statement of their Australia 2022 Article IV mission on Wednesday.