The Reserve Bank of Australia also downgraded its full-year GDP forecast for 2025 to 1.7% from 2.1%, saying that weaker-than-expected growth in public demand in early 2025 was unlikely to be offset through the rest of the year.

Australia's central bank cut interest rates on Tuesday for a third time this year and signaled further policy easing might be needed to meet its inflation and employment goals as the economy lost some momentum.

The Reserve Bank has followed through on its widely anticipated interest rate cut, announcing a 0.25 percentage point reduction to 3.6 per cent.