The International Monetary Fund has called on Australia's federal and state governments to cut spending, warning that fiscal discipline is needed to help bring persistent inflation under control. In its annual assessment, the Washington-based institution downgraded its forecast for Australia's real GDP growth in 2027 by 0.1 percentage points to 1.6%, citing the rising likelihood of another interest rate increase by the Reserve Bank of Australia. The IMF cautioned that surging global energy prices — with the Brent crude benchmark recently topping US$108 a barrel — risk pushing inflation higher, and noted that weak productivity growth remains the country's key long-term economic challenge.