Australian inflation will be close to the highest in developed world, International Monetary Fund projects

A top economic agency reckons Australia will have close to the highest inflation in the developed world next year — risking local borrowers falling behind as other countries cut interest rates.

The International Monetary Fund declared “the global battle against inflation is almost won” in a report released on Tuesday night and encouraged moves by central banks to reduce rates.

But the IMF’s projections show Australia near the back of the pack on the inflation fight, predicting consumer prices will rise 3.3 per cent in 2025.

That will rank Australia with Iceland and the Slovak Republic among advanced economies with inflation north of 3 per cent, the Reserve Bank’s crucial target.

Borrowers wanting relief have already been left waiting after the RBA ruled out easing interest rates until it’s sure surging prices are back under control.

They’ve watched on as the United States Federal Reserve slashed interest costs in September — although the US rate remains higher than the RBA — and the European Central Bank also eased.

The IMF backed more relief as inflation slows.

“Since June, major central banks in advanced economies have started to cut their policy rates, moving . . . toward neutral,” the fund’s report said.

“This will support activity at a time when many advanced economies’ labour markets are showing signs of weakness, with rising unemployment rates.

“It will also help ward off the downside risks.”

Australia’s jobs market has been firing on all cylinders, however, and the RBA deliberately opted to raise rates less than other key countries so as to keep employment humming.

The national economy’s growth will accelerate to 2.1 per cent next year, the IMF expects, while warning of a few threats that will keep punters up at night.

Especially relevant Downunder are the troubles in top export partner China, and widespread international moves toward protectionism.

Treasurer Jim Chalmers said the report highlighted “big risks weighing on a weak and fragmented global economy”.

He said there were substantial threats from conflict in the Middle East and a slowdown in China’s property sector.

“These global challenges put a premium on the type of responsible economic management that has been a hallmark of the Albanese Government from day one,” Mr Chalmers said

“Our focus is on fighting inflation and easing the cost of living at the same time as we invest in a more productive and resilient economy and repair the budget, and we’re making progress on each of these fronts.”

The IMF wants countries to lower interest rates, slash government debt, and embrace structural reforms to get growth moving and get ready for any negative shocks.