FX.co ★ Australia Leading Index Inches Lower

In March 2025, the Westpac-Melbourne Institute Leading Economic Index for Australia experienced a slight decline of 0.1% compared to the previous month, counteracting the 0.1% gains observed in the preceding two months. Concurrently, the index's six-month annualized growth rate, which predicts the likely pace of economic activity compared to the trend over the next three to nine months, decreased to 0.6% from 0.9% in February. This new data indicates that the economy is starting to feel the effects of trade policy disruptions that escalated following U.S. President Trump's announcement of "reciprocal" tariffs on April 2. As a result, Westpac has revised its GDP growth forecast for 2025 down to approximately 1.9% year-over-year, compared to the prior estimate of 2.2%. Matthew Hassan, the Head of Australian Macro-Forecasting, suggests that the combination of a deteriorating external environment and increasing evidence of persistent slowing in domestic inflation will likely lead the Reserve Bank of Australia to implement an additional 25 basis points rate cut at its upcoming meeting in May.