Interest rates are currently at a record low and, unfortunately for savers, they are likely to be going even lower in the near term.
According to the latest Westpac Banking Corp (ASX: WBC) Weekly economic report, its economists believe the Reserve Bank will cut the cash rate to 0.75% in October and then down to 0.50% in February.
Westpac chief economist, Bill Evans, said: "We are bringing forward the timing of our forecast for the next cut in the overnight cash rate by the RBA from November to October. By October, we expect that the path of the unemployment rate will be sufficiently contrary to the RBA's plans that they will have appropriate justification to ease policy a little earlier than we had previously expected."
And while Mr Evans admitted the first cut could come as soon as September, he expects the central bank to wait for further economic data.
Mr Evans explained: "We recognise that September is also likely to be a "live" meeting but expect the Board will wait for more data, such as the June quarter national accounts, before moving again."
After which, the bank expects the RBA to cut the cash rate to 0.50% in February.
As well as the cut, Mr Evans has suggest that the RBA "may be prepared to link the move with a package of other policies, most appropriate for the Australian financial system, that would result in an effective reduction in the mortgage and business interest rates to ensure effective pass through of the rate cut."
In light of this, it could be a good time to look at the many dividend shares on offer on the local share market for your income needs such as diversified property group Stockland Corporation Ltd (ASX: SGP) or agriculture-focused retail investment trust Rural Funds Group (ASX: RFF).
