The Reserve Bank of Australia should lift interest rates further and the Albanese government must deliver federal and state spending cuts to reduce inflation to target before 2026, the International Monetary Fund has advised. In a major review of the economy, the IMF ramped up calls for “comprehensive tax reform” to fix weak labour productivity growth.
An optimal tax package for growth and equity would include relying more on the GST, taking pressure off personal income tax paid by workers and cracking down on capital gains tax breaks, it recommended. In a bombshell finding after meeting with the RBA, IMF staff said interest rates should be “tightened further to ensure inflation comes back to target earlier than 2026” – slightly later than the RBA’s forecast of inflation scraping below 3 per cent in late 202