The International Monetary Fund has warned that Australia’s inflation problem has worsened, giving the Reserve Bank of Australia scope to raise interest rates further if price pressures persist. It said restoring inflation to target should be the immediate priority, while economic growth is expected to slow after three rate rises and weaker productivity.

The IMF urged Treasurer Jim Chalmers to pursue more ambitious tax and spending reforms, including replacing stamp duty with land tax, shifting taxation towards consumption and reducing government spending. It also endorsed housing and productivity measures, but warned of implementation costs, rising energy prices and possible construction pressures from the artificial intelligence and data-centre boom.