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Macro EconomyMedium•17 April 2026•

1 min read

IMF Warns of Persistent High Inflation in Australia Through 2026

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Key Facts

1The IMF projects Australia's inflation to reach 4.0% in 2026, ranking among the highest in the developed world.

The International Monetary Fund (IMF) has issued a cautionary outlook for Australia, projecting inflation to reach 4.0% by 2026, positioning it among the highest in the developed world. Consequently, the IMF downgraded Australia's GDP growth forecasts to 2.0% for 2026 and 1.7% for 2027, citing persistent energy price shocks. The report highlighted that military conflicts in the Middle East and potential disruptions to the Strait of Hormuz are testing global economic resilience. Rising energy costs, including jet fuel hitting $120 per barrel, have created second-order inflationary effects that impact Australia more severely than its global peers. These forecasts suggest the Reserve Bank of Australia (RBA) may need to maintain elevated interest rates for an extended period to curb price growth. Such a trajectory presents a bearish outlook for domestic growth and equity markets as the economy grapples with these structural headwinds.