Westpac has tipped the RBA to cut interest rates before the end of 2011.
Westpac has advised savings account holders that the Reserve Bank of Australia (RBA) may find itself with no alternative but to cut interest rates before the end of this year.
In a report issued last weekend, Westpac economist Bill Evans predicted the bank rate would be lowered by around one per cent during the next 12 months, citing lingering uncertainty over global fiscal stability.
"The catalyst for the first rate cut is likely to be associated with these European convulsions, but further cuts will be driven by the combined negative impact of European events on confidence and specific domestic issues," he stated.
Mr Evans added that current interest rates are too high due to ongoing weakness in the domestic economy outside of the resources sector and tipped the RBA to implement a 0.25 per cent reduction in December.
Last week, assistant Treasurer Bill Shorten announced plans to cut tax on interest income for individuals with savings accounts, claiming more than five million people will benefit from the reform.
By Joe Letts
