Australia’s Westpac Leading Index showed a slight improvement, rising from -0.26% to -0.15% in September. However, the index remains in negative territory, indicating “below-trend momentum” that is expected to carry into 2025.
Westpac maintains that while growth will improve next year, it will remain “relatively subdued,” with GDP growth forecasted to gradually rise from annualized 1% currently to 1.5% by the end of 2024, reaching 2.4% by the end of 2025—still below the long-term trend of slightly above 2.5%.
As for monetary policy, RBA is not expected to change its cash rate target at the upcoming meetings in November and December.
However, Westpac anticipates a shift in RBA’s messages, moving away from its 2024 focus on “inflation vigilance.”
Key data releases, including Q3 CPI on October 30 and national accounts on December 4, are likely to confirm a subdued growth environment and provide RBA with enough confidence to start considering less restrictive policies in 2025.
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