Overview
- The IMF’s latest outlook says US tariff pass-through will contribute to a drawn-out period of above-target inflation in Australia despite recent easing.
- Its growth projections for Australia are little changed, with GDP seen at 2.1% in 2026 and 2.2% in 2027, implying continued below-trend expansion.
- The report highlights a risk that an AI-fueled equity sell-off could trigger a prolonged valuation correction and weigh on global demand through tighter financial conditions.
- Australia’s latest readings show headline inflation at 3.4% and the RBA’s trimmed mean at 3.2%, with Treasury expecting inflation to stay above target at least until June.
- Domestic debate is intensifying ahead of the RBA’s February 2–3 meeting, with CBA and NAB tipping a hike, Westpac and ANZ expecting a hold, and economists urging pro‑growth reforms and lower energy costs to lift investment.