Australia markets closed
  • ALL ORDS

    7,225.20
    -27.10 (-0.37%)
     
  • AUD/USD

    0.7633
    +0.0010 (+0.13%)
     
  • ASX 200

    6,974.00
    -21.20 (-0.30%)
     
  • OIL

    60.46
    +1.14 (+1.92%)
     
  • GOLD

    1,740.10
    -4.70 (-0.27%)
     
  • BTC-AUD

    79,391.37
    +753.66 (+0.96%)
     
  • CMC Crypto 200

    1,294.07
    +66.53 (+5.42%)
     

RBA tipped to cut cash rates TWICE in 2019

RBA tipped to cut cash rate twice. Source: Getty Images
RBA tipped to cut cash rate twice. Source: Getty Images

Unfortunately for income investors and savers, the economics team of one of Australia’s leading banks is tipping the Reserve Bank of Australia to cut the cash rate twice in 2019.

According to the latest Westpac’s weekly economic report, the bank has predicted the cash rate will be cut by 25 basis points in both August and November of this year.

The release explains: “Westpac now expects the Reserve Bank to cut the cash rate by 25bps in both August and November this year. We have revised down our GDP growth forecasts for 2019 and 2020 from 2.6% to 2.2%. With the slower growth profile we now expect to see the unemployment rate lift to 5.5% by late 2019. That makes a strong case for official rate cuts to cushion the downturn and, in turn, meet the RBA’s medium term objectives.”

Why August and November?

Westpac’s team believe that while the forces around a slowing economy, falling house prices, and weak consumer spending are already visible, current forecasts indicate that the Reserve Bank doesn’t expect these conditions to persist.

“Recognition of this persistence is likely to take some time, but not too much time. Our preferred estimate would be the August Board meeting.”

This is because this timing will allow two further inflation prints which could confirm that “growth remains stuck well below trend, is constraining inflation with little likelihood of achieving the current forecast of 2.25% inflation in 2020. A second cut at the November Board meeting is likely to follow.”

What now?

I think there’s a strong chance that Westpac’s forecasts could prove accurate, which would be bad news for savers and income investors that have funds in savings accounts.

In light of this, I would suggest they consider putting their money to work in the share market with one of the many quality dividend shares on offer such as Westpac, Sydney Airport Holdings Pty Ltd, and Accent Group Ltd.

Alternatively, here are three buy-rated dividend shares to consider snapping up this week.

NEW! The Motley Fool’s team of crack analysts has just released a timely report revealing the names and codes of their top 3 dividend share recommendations for 2019. Be among the first investors to get access—FREE, for a strictly limited time. You’ll discover the names of 3 hefty dividend paying companies with what our analysts consider to be solid growth prospects for the year ahead.

The first two currently offer fat, fully franked yields and the third is a surprising REIT offering you the chance to become a landlord with none of the hassle! If you’re looking for hot new ideas, look no further. But you do need to hurry. Snap up your free copy now, before supplies run out!

– Motley Fool

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.

Now read: Here’s what the average Aussie earns per week – how do you stack up?

Now read: Is the Aussie economy slowdown good or bad news for you?

Now read: Muffin Break GM slammed on social media for criticism of millennials who won’t work without pay