On Wednesday the National Australia Bank Ltd (ASX: NAB) economics team became the latest group of economists to push back its forecasts for a rate hike from the Reserve Bank of Australia.
According to the NAB Group Economics release, the bank has now ruled out a hike in 2019 and expects "the first RBA increase in the cash rate to the second half of 2020."
The blame for this has been put largely on the lack of wage growth in Australia. Although output growth has been in line with expectations, the bank's economics team notes that "wages pressure remains weak and hence inflationary pressure has remained low, with the core measures continuing to track below the RBA's target band. We expect that will continue through all of 2019."
In addition to this, the team appears concerned over the impact of falling house prices on the local economy.
It said: "Falling house prices suggest a bigger impact on housing construction than previously incorporated and additional concerns about the consumer, though low rates and unemployment are important offsets."
Elsewhere, on Monday the latest Westpac Banking Corp (ASX: WBC) weekly economic report revealed that its team doesn't expect the Reserve Bank to make a move until 2021 at the earliest.
Its report has the cash rate on hold at the record low of 1.5% until as far out as December 2020.
What now?
I agree with these two banks that it is likely to be some time until we see the cash rate move higher.
Because of this, I think investors would be better off skipping savings accounts and term deposits in favour of the many quality dividend options on the local share market.
Dividend shares such as National Storage REIT (ASX: NSR), Super Retail Group Ltd (ASX: SUL), and Sydney Airport Holdings Pty Ltd (ASX: SYD) could all be worth considering in this low interest rate environment.
