The International Monetary Fund (IMF), in its annual review, said “Australia should continue to tighten monetary and fiscal policy to contain inflation even as its economy is set to slow sharply next year amid a host of downside risks, including falling house prices.”

The IMF forecasts economic growth in Australia to slow to just 1.7% in 2023-2024, citing higher interest rates, persistent inflation, weakening export demand and declining housing prices.

Market reaction

AUDUSD is holding steady, trying to find its feet above 0.6750 amid a retreat in the US Dollar across the board. Investors stay on a cautious footing amid looming geopolitical risks.