Warning! RBA boss says 50:50 chance cash saving rates will be cut again

Warning: Term deposit rates could be about to get even lower!

| More on:
RBA ASX 200 bond buying rate decision

Credit: Pixabay

This afternoon the governor of the Reserve Bank of Australia, Philip Lowe, told Australians that the next move in benchmark interest rates is just as likely to be lower as it is higher.

It’s a warning that has sent the Australian dollar 1.1% lower to buy just 71.5 U.S. cents and sent the share market higher as traders bet companies earning revenues and profits offshore will benefit.

Below is some of the verbatim text of the governor’s speech on monetary policy today, titled The Year Ahead.

Source: Reserve Bank of Australia, Feb 6, 2019.

For share market investors the likelihood of another cash rate cuts means a couple of things.

Shares that pay big dividends and offer relatively defensive revenue streams will be popular with income seekers, especially those in the retirement phase.

For example Telstra Corporation Ltd (ASX: TLS) shares are up at a one-month high today, although it’s not a stock I’d suggest buying.

For conservatively-minded income seekers better bets for income include Sydney Airport Holdings Ltd (ASX: SYD) or Transurban Group (ASX: TCL).

While those wanting fully franked dividends could look to Dicker Data Ltd (ASX: DDR) or Accent Group Ltd (ASX: AX1).

Both should offer yields above 5.5% (plus full franking credits) in the 12 months ahead and have a decent chance of capital growth in my opinion.

The potential for a falling Australian dollar through 2019 also means leading healthcare companies should once again benefit.

Today the CSL Limited (ASX: CSL) share price is below $190 and I’d buy this stock happily today in the pursuit of US dollar exposure, a little income, and growth.

Of course all of the above investments carry substantial risks, but remember cash in the bank returns a pittance today and potentially less tomorrow.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Motley Fool contributor Tom Richardson owns shares of Accent Group and Dicker Data Limited and CSL. You can find Tom on Twitter @tommyr345 The Motley Fool Australia owns shares of and has recommended Dicker Data Limited, Sydney Airport Holdings Limited, Telstra Limited, and Transurban Group. The Motley Fool Australia has recommended Accent Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News