IMF: Australian interest rates must go up soon

The International Monetary Fund (IMF) has suggested that Australia and its neighbours may soon have to hike interest rates in order to protect economic growth in the region.

In its Regional Economic Outlook for Asia and the Pacific, the IMF said that while such growth looks set to continue, governments in the region must use monetary policy to control inflationary pressures building up as result of rising foreign investment.

"We welcome the steps so far taken by policymakers to control inflation risks … but more now needs to be done given the continued strong growth in the region,'' the IMF's director for the region Anoop Singh said.

According to the AAP, analysts are once again unsure about when the Reserve Bank of Australia (RBA) will raise interest rates following the recent release of the minutes from its October board meeting.

It is expected that the RBA will hike rates soon, but the October minutes also served to throw "the strength of the Australian dollar into the mix of its policy deliberations given its soothing impact on inflation", the AAP said.

The RBA elected to keep the official cash rate on hold at 4.5 per cent at the meeting earlier this month.

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