Australian Bond Exchange Weekly Update
24 April 2026
Market Insights
- Westpac-Melbourne Institute Leading Index Slips Below Trend
- US retail sales rose strongly in March
- Reserve Bank of India warns of significant downside risk to growth
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Key Points
- Australia: The RBA increased cash rates by 0.25% to 4.10% p.a. at its March meeting. February CPI decreased slightly to 3.70% p.a., and the Trimmed Mean was 3.30% p.a.
- United States: The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% p.a. at its February 2026 meeting. The latest U.S. CPI inflation rate is at 3.3% (YoY) as of March 2026.
- United Kingdom: The Bank of England held Bank Rate steady at 3.75% p.a., and CPI for March increased to 3.3% p.a., up from 3.0% in February.
- Eurozone: The European Central Bank kept its key deposit facility rate unchanged at 2.00% p.a., and recent data show inflation in the euro area increased to 2.6% p.a. in March, up from 1.9% in February.
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash Rate: 4.10% p.a. | 3.70% (Feb 2026) |
| United States | Fed Funds: 3.50–3.75% | 3.3% (Mar 2026) |
| United Kingdom | Bank Rate: 3.75% | 3.3% (Mar 2026) |
| Eurozone | Deposit Rate: 2.00% | 2.6% (Mar 2026) |
Westpac-Melbourne Institute Leading Index Slips Below Trend
The Leading Index growth rate has now swung from +0.31% in October last year to –0.15% currently, a 0.44ppt deterioration. The latest Leading Index update suggests that higher interest rates, alongside the recent rise in fuel prices tied to Middle East tensions, are beginning to weigh on growth momentum.
Matthew Hassan, Head of Australian Macro-Forecasting at Westpac, noted that while the growth pulse is not especially weak, this marks the first below-trend reading since August last year. The Westpac-Melbourne Institute Leading Index of Economic Activity is designed to assist in identifying turning points in the economy.
The index combines variables that reflect different aspects of the economy into a single index that generally produces a more reliable cyclical indicator than any single component taken individually. The Leading Index of Economic Activity provides advanced information on the state of the economy and gives early warnings of cyclical turning points
US Retail Sales Rose Strongly in March
Retail Sales Contribution Heatmap
| Group | Weight | Mar | Feb | Jan | Dec |
|---|---|---|---|---|---|
| Motor Vehicle And Parts Dealers | 18.79 | 0.087 | 0.186 | -0.14 | -0.009 |
| Nonstore Retailers | 18.12 | 0.186 | 0.208 | 0.321 | -0.002 |
| Food Services And Drinking Places | 13.53 | 0.019 | 0.072 | -0.045 | -0.048 |
| Food And Beverage Stores | 11.35 | 0.079 | -0.139 | -0.002 | 0.02 |
| General Merchandise Stores | 10.51 | 0.106 | -0.003 | 0.058 | -0.005 |
| Gasoline Stations | 7.09 | 1.096 | 0.091 | -0.155 | 0.027 |
| Building Materials & Garden | 5.58 | 0.041 | 0.034 | 0.041 | 0.06 |
| Health & Personal Care | 5.37 | 0.024 | 0.105 | -0.164 | -0.014 |
| Clothing & Accessories | 3.76 | 0.001 | 0.102 | -0.013 | -0.03 |
| Furniture & Electronics | 2.57 | 0.042 | 0.006 | 0.028 | -0.023 |
US retail sales rose strongly in March, with headline growth of 1.7% month over month and the core group (excluding more volatile components like autos, gasoline, building materials, and food services) increasing by 0.7% month over month. The gains were broad-based, alongside continued resilience in the household sector. This strength provides a further indication of the underlying resilience of the US economy ahead of the Iran war shock, with consumer spending momentum already firm before the full impact of higher energy prices fed through.
Reserve Bank of India Warns of Significant Downside Risk to Growth
The Monetary Policy Committee (MPC) minutes released by the Reserve Bank of India on Wednesday highlight growing macroeconomic risks stemming from the conflict in Iran and associated disruptions in the Strait of Hormuz.
According to the minutes, the conflict poses significant downside risks to India’s growth outlook while simultaneously creating upside risks to inflation. This reflects the dual impact of higher global energy prices and potential supply chain disruptions, even as domestic economic momentum in India remains broadly resilient.
The MPC noted that the situation has triggered “severe disruption of global supply chains,” contributing to a more challenging global macroeconomic environment characterised by higher prices and weaker global growth. This combination, the committee observed, is complicating policy choices for central banks, which must balance inflation control against supporting economic activity in an increasingly uncertain external backdrop.
Why this is important: India is a clear example of an economy balancing strong domestic growth with significant exposure to external shocks, particularly in energy markets and global trade. It also highlights the uneven impact of geopolitical tensions, which tend to affect energy-importing Asian economies more severely than the US.
World Economic Calendar
*Data accurate as at 24.04.2026
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