IMF downgrades Australian outlook

The International Monetary Fund (IMF) has downgraded the growth forecast for Australia from 2% to 1.9% in its latest World Economic Outlook.

This comes as Reserve Bank of Australia (RBA) assistant governor Sarah Hunter hinted to the Australian Conference of Economists another cash rate hike could be on the cards.

Hunter said the RBA will "continue to act as needed" to ensure inflation returns to the target range of 2-3% and the labour market has sustainable full employment.

"Ultimately, while supply shocks create difficult trade-offs, they do not lessen the importance of maintaining low and stable inflation.

"Supply shocks create unavoidable trade-offs for a central bank and the broader economy, and these trade-offs are complex and multifaceted. What has changed is that these shocks appear to be becoming more frequent," Hunter said.

"That means the RBA - and the economy more broadly - may have to face these trade-offs, and the costs that come with them, more often in the years ahead. That makes it even more important that we understand these shocks well, prepare for them, and respond in a way that minimises the risk of persistent inflation while supporting sustainable activity."