Westpac / Melbourne Institute (MI) Leading Index for December, FLAT at 0.0% change on the month

westpac leading index 28 January 2015

Comments from Westpac:

  • The six month annualised deviation from trend growth rate of the Westpac Melbourne Institute Leading Index which indicates the likely pace of economic growth three to nine months into the future declined from –0.49% in November to –0.61% in December.
  • Leading Index has now registered below trend growth in eleven of the last twelve months.

Westpac on the upcoming RBA meeting:

  • The Reserve Bank Board next meets on February 3. While market pricing is only giving a one in four chance of a February interest rate cut, Westpac’s view is that the case for lower rates in strong.
  • The December Leading Index adds to this, showing growth momentum remains weak.
  • With commodity prices continuing to fall in 2015, incomes and confidence remain under pressure.
  • We expect the December quarter inflation report due out later today will show sufficient scope for the RBA to cut rates with a February move seen as more attractive for the Bank given that it coincides with a full Statement on Monetary Policy and a full revision to its forecasts