The Reserve Bank of Australia may drop the official interest rate to its lowest level since the 1950s just days out from the Federal Election.

In a move that saw the Australian dollar fall and forced financial markets to price in an interest rate cut, RBA governor Philip Lowe has used a major address to concede cash-strapped consumers and a slowing property market in some cities posed risks to the economy.

For the past year, the RBA has signalled the next move in the cash rate – currently at a near-record low 1.5% – would be up, given a strong jobs market and solid economy.

But the failure of low unemployment to lift wages significantly and signs consumers are spending less has forced the RBA to lower its forecasts for the economy.

Armed with important new inflation figures to be released in late April, the RBA board will meet on 7 May – just days ahead of a federal election widely expected to be held on 11 May or 18 May.

Lowe says much will hinge on the strength of the jobs market, with unemployment now at 5%.