The Reserve Bank kept benchmark lending rates at a record low 1.5% again today and failed to offer savers any comfort that it's likely to lift cash rates soon.
In fact economists and financial markets traders are still tipping the central bank could slash rates by another 50 basis points before the end of 2019.
If these predictions are accurate savers will be staring at insultingly low returns on bank deposits that are likely to be negative to flat real returns once you adjust for the corrosive impact of inflation.
Currently, the Commonwealth Bank of Australia (ASX: CBA) offers savers just 2.2% interest on a 12-month fixed term deposit of $50,000. While you'll receive even less if you want the flexibility of being able to draw down the funds.
Banks generally 'lend long' (i.e. profitable 25-year home loan lending collateralised against property) and borrow short (customers' term deposits, bank paper, etc,) so falling short-term lending rates and easier money may prove a small boost for their net interest margins.
However, whether this is sufficient to offset other headwinds including falling house prices, slower credit growth, and rising costs is yet to be seen in terms of their net cash profits.
However, cashed-up SMSF investors could do worse than looking for dividends among big bank shares like CBA or Westpac Banking Corp (ASX: WBC), while I also wrote earlier in the week how Macquarie Group Ltd (ASX: MQG) looks a sound bet for conservative income seekers.
Elsewhere, I'd also consider Sydney Airport Holdings Ltd (ASX: SYD), Dulux Group Ltd (ASX: DLX), or Accent Group Ltd (ASX: AX1) for some term-deposit-thumping dividend returns.
