Will it or won't it? That's the question many are asking of the RBA right now.
Australia and New Zealand Banking Group (ASX: ANZ) said on 15 January: "Weaker growth and lower inflation in 2015 will provide the RBA with a reason and the scope to take the cash rate down 50bp to 2.00% over the first half of the year".
While, Westpac Banking Corp (ASX: WBC) Chief Economist Bill Evans stated earlier this month the bank's expectation is the case for cutting rates "will be made" around the time the next inflation report comes out.
Then, The Australian Bureau of Statistics (ABS) released its inflation report on Wednesday showing core inflation data higher than expected. So was it enough to sour the rate cut chances? Who knows. If it's difficult for the experts to peer into the future a few weeks ahead of the next RBA meeting on 3 February, average investors really don't have much of a chance.
Billionaires Warren Buffett and Charlie Munger, the respective chairman and vice-chairman of Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B), don't even try.
Buffett wrote in 1994, "We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen… We have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist."
Whether rates stay put or go a bit lower, more bank depositors will defect over to dividend stocks to secure a better rate of return.
One stock to watch-
Perpetual Limited (ASX: PPT) offers a 4.2% fully franked yield and is forecast to grow dividend payments over 20% on average annually in the next few years. The fund manager has been very successful with domestic equities investing and is now launching new funds that will concentrate on international equity markets where sustained growth is expected to occur.
