One of the strangest developments for stock players recently has been the continuance of the bull market led by defensive, income-paying stocks. This question was rammed home as the Reserve Bank cut the official cash rate of interest in July, after doing the same in June.
This took the cash rate down to 1%. And there are economists out there predicting we’ll see what the RBA Governor, Dr. Phil Lowe, would rather not have to create, and that’s a cash rate at 0.75%, or worse still, 0.5%.
That’s why Dr Phil has pumped in two rate cuts worth 0.5% since the May 18 election, which undoubtedly he hopes will be helped by tax cuts that will deliver an immediate tax cut up to $1,080 for low and middle-income taxpayers. This will inject $15 billion into an economy crying out for stimulation. And along with a lower dollar and infrastructure spending by the Government, this could see the economy step up to higher growth in the second-half of 2019 rolling into a stronger 2020.