After a long period of aggressive interest rate rises to combat inflation .. could we soon be in a new and welcome era of interest rate cuts?

That's a real possibility after inflation slowed dramatically in the final quarter of last year, taking the annual pace down to 4-point-1 percent.

But how realistic is that outlook for rate cuts given that inflation is still well above the Reserve Bank's target?

Annual inflation has dipped to 4.1 percent in the December quarter update, sparking speculation the Reserve Bank will leave the cash rate on hold at next week's board meeting. The significant slowing is adding to bets the RBA will soon consider interest rate cuts. Earlier today, the International Monetary Fund signalled central banks could begin cutting rates by the end of 2024 as inflation slows.

Reporter: Peter Ryan, Senior Business Correspondent

After recent years of economic gloom driven by the pandemic and geopolitical flareups, the International Monetary Fund is now predicting a soft economic landing for much of the world.

The IMF has flagged a faster easing of inflation and is even warning warned central banks shouldn't wait too long before cutting interest rates - suggesting rate cuts should begin in the second half of the year.

The International Monetary Fund is predicting a "soft landing" for the global economy as inflation slows faster than expected. Chief economist Pierre-Olivier Gourinchas warns central banks shouldn't wait too long before cutting interest rates to ease pressure on households reeling from aggressive rate hikes.

Reporter: Peter Ryan, Senior Business Correspondent

Featured: Pierre-Olivier Gourinchas, IMF chief economist

It's been described as "a slow moving train wreck" that continues to destabilise China's economy and potentially the rest of the world.

We're talking about the China Evergrande Group - the real estate goliath that's facing a complicated liquidation on the order of a Hong Kong court yesterday.

So what could be the fallout here in Australia?

Also I speak with Deloitte Access Economics partner about widening geopolitical risks and "cracks appearing" in Australia's economy.

Official interest rates are expected to remain on hold on growing evidence that inflation in slowing. An quarterly CPI update on Wednesday is tipped to see annual inflation running at a slowing pace of 4.3 percent, down from 5.4 percent, raising the possibility of interest rate cuts by the end of the year.

Reporter: Peter Ryan, Senior Business Correspondent

Economists at the Commonwealth Bank predict the Reserve Bank will cut the cash rate by 0.75 percentage points from September 2024 with further cuts in 2025 as inflation comes back into the 2 to 3 percent target range.

Also - Peter Ryan on the year's biggest stories.

The Reserve Bank board left official interest rates on hold a fortnight ago given "encouraging signs" that aggressive hikes are conquering inflation. In its final meeting of the year, the RBA board held the cash rate at 4.35 per cent despite concerns that inflation could remain above the 2 to 3 per cent target "for a prolonged period".

Reporter: Peter Ryan, Senior Business Correspondent

Oil prices have surged as attacks by Iran-alinged Houthi rebels from Yemen continue to disrupt crucial shipping in the Red Sea. The attacks have promped efforts by the United States to build a coalition to deal with the threat as shipping firms are forced to divert around the Cape of Good Hope to avoid the Suez Canal.

Reporter: Peter Ryan, Senior Business Correspondent

Featured: Guy Platten, secretary-general, International Chamber of Shipping

The year might be winding down as we approach Christmas - but there's not too much of a break for economists tracking where official interest rates might go next year.

Which is why there'll be a lot of attention tomorrow when the Reserve Bank releases the minutes from its most recent meeting.