Insights

Will the Reserve Bank cut the cash rate again in October?

Westpac Banking Corp (ASX:WBC) is expecting the Reserve Bank to cut the cash rate on Budget Day. How should you respond?
The post Will the Reserve Bank cut the cash rate again in October? appeared first on Motley Fool Australia. –

man surrounded by illustrations of question marks and looking pensive as if trying to decide whether to buy asx shares

According to the latest Westpac Banking Corp (ASX: WBC) Weekly economic report, the banking giant expects the Reserve Bank to cut the cash rate on 6 October.

Chief Economist Bill Evans commented: “In a speech on Tuesday, the Deputy Governor of the Reserve Bank gave a fairly clear hint that the Board is set to cut the cash rate and other key policy rates at its October Board meeting.”

This is despite the meeting falling on the same day as the Federal Budget.

Mr Evans explained: “The prospect of the RBA ‘sitting back’ to assess the Budget, which has been seen as the ‘norm’ in previous years is not appropriate for these unique times.”

“We now expect the RBA to cut the overnight cash rate to 10 basis points; to adopt a 10 basis point three year bond target; and to adjust the rate on any new drawdowns of the Term Funding Facility to 10 basis points. All these rates are currently set at 25 basis points, which the Governor has generally described as the effective lower bound for the cash rate,” he added.

When will rates increase again?

If Westpac’s forecasts prove accurate, it will be some time before the cash rate is heading higher again.

The bank is currently forecasting that the cash rate will remain on hold at 0.1% until at least June 2022, which is where its forecast period ends.

In light of this, I think it could be upwards of five years until rates are back to “normal” levels.

As a result, I continue to believe the share market will be the best place to generate an income over the coming years.

But which dividend shares should you buy? Two of my favourite options for income investors are commercial property company and Bunnings landlord BWP Trust (ASX: BWP) and agricultural property company Rural Funds Group (ASX: RFF).

As well as offering generous yields at present, I believe both companies have the potential to grow their earnings and distributions at a solid rate over the 2020s.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks 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.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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.

The post Will the Reserve Bank cut the cash rate again in October? appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!