The International Monetary Fund (IMF) has released its projections on Thursday, saying that Australian inflation will remain within the official two to three percent target band this year, as its regional economic outlook in Asia-Pacific identified the rising mortgage rates as potentially harmful in regaining consumer confidence in the property market.

According to the Australian Associated press (AAP), the IMF reported that household consumption will be boosted by real income growth as the labour sector crawl its way to recovery and with Australian inflation fixed at about 2.4 percent in 2010 and 2011.

The projection was released in the aftermath of a jump in the consumer price index (CPI) by 0.9 percent in the March quarter and an inflation rate hike of 2.9 percent from 2.1 percent posted in December.

The movements drove analysts to predict that the Reserve Bank of Australia will lift anew the cash rate when the board meets Tuesday next week as the IMF specified in its report that the Australian economy largely emerged unscathed from a recession and is fast recovering due to its healthy business trade with China.

The IMF added that private investment in the resource industry will be further buoyed by strong commodity prices and steady demand from China, as the Australian economy anticipates growth of 3.0 percent in 2010 and 3.5 percent in 2011 with private domestic demand fuelling the growth.

It also said that more stimuli for private investment will be sourced from public infrastructure which will be in place to pave for the movements of commodity exports, but warned at the same time that the positive outlook could be marred by significant downturn in China that could infect the whole region.

The IMF pointed to China's overtures in controlling its credit standings and regulating the housing market to evade inflation and asset price spikes, as it cautioned that such tightening would affect economies reliant to China's strong economic performance and would be hurt once China hits a plateau.

The AAP has reported that most likely to be affected by China's slow down, should it happen, are commodity exporters such as Australia, Indonesia and Malaysia; and capital goods exporters with Korea and Taiwan leading the pack.