On Tuesday of next week the Reserve Bank is scheduled to hold its next cash rate meeting.

At present, cash rate futures reveal that the market is divided on what the central bank will do.

Futures are pointing to a 53% probability of rates remaining on hold and a 47% probability of rates being cut to zero.

Could rates go lower?

According to the latest weekly economic update by Westpac Banking Corp (ASX: WBC), its team has suggested that there is a real possibility that the Reserve Bank could not only take rates lower, but also take them into negative territory in the future.

Although the bank maintains is forecast for rates to stay at 0.25% for the foreseeable future, it isn’t ruling out further cuts.

Chief Economist Bill Evans commented: “[A] serious case can be made for the RBA to consider further cuts and entering negative territory for the cash rate if it becomes apparent that the economy is deteriorating even more than is currently expected.”

Mr Evans sees positives in a move to negative rates.

“A small open economy with significant foreign liabilities would certainly see a substantial improvement in the competitiveness of the currency with further rate cuts when other major markets are anchored at their effective lower bounds,” he added.

What are the negatives of negative rates?

It is worth noting that Westpac’s chief economist does have a few concerns over negative rates.

This is mainly the impact they could have on expectations and confidence.

Evans explained: “Is there some nonlinear impact on expectations as rates move into negative – a ‘sticker shock’ even though the same policies have been seen abroad – or does such a bold move strengthen perceptions of the RBA’s determination to deliver on its objectives?”

But Evans believes the Reserve Bank can avoid this by communicating its objectives to avoid any shocks.

“The risks are as much about framing and communication as the policy itself. As we have already seen with the move to ultra-low rates and then QE, if moves come as too much of a surprise, they can exacerbate concerns about the economy and cast doubt on the ability of policymakers to achieve better outcomes,” he said.

Mr Evan concluded: “Although there is a clear current message from the RBA, circumstances can change and astute policy makers (as the RBA has proven to be over many decades) can change with them.”

Foolish takeaway

I would be surprised if rates went lower from here, but anything is certainly possible in the current environment.

But one thing that is for sure, is that in looks set to be many years until rates return to normal levels again.

More reading

• 2 ASX shares to buy for strong retirement income
• 3 cheap ASX 200 shares I’d buy today
• ASX 200 down 1.2%: Westpac tumbles, Appen reaffirms guidance, Costa CEO to retire
• Why Costa, Freedom Foods, Sonic, & Westpac shares are tumbling lower
• ASX 200 rises again, ASX banks push higher

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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It’s been a wild ride for ASX 200 shares in 2020 as the S&P/ASX 200 Index (ASX: XJO) has gone from bull to bear to bull again.

So if you’ve got $20,000 burning a hole in your pocket right now, here’s a couple of investment ideas to get you started.

Where to invest $20,000 in ASX 200 shares today

I like the look of large-cap dividend shares right now. That means BHP Group Ltd (ASX: BHP) shares could be in the buy zone for me.

The resources sector could be set to boom in the next year or so. Governments are looking to kickstart their economies and infrastructure is a great way to do that. That means steel (and iron ore) could be in high demand which is good for BHP earnings.

If you’re not bullish on BHP, there are other ASX 200 shares I like right now. I think AGL Energy Limited (ASX: AGL) could offer defensive exposure which is valuable in the current market.

AGL shares have fallen sharply in 2020 and still offer a solid dividend yield. While I wouldn’t bank on dividend yields ahead of the August reporting season, I think AGL is well-placed in the Aussie energy market.

There are some headwinds, like lower corporate energy use, but higher residential consumption could help to offset that. If you’re buying for the long-term, I think AGL could also be a major renewables player in the next decade or so.

Finally, I think Telstra Corporation Ltd (ASX: TLS) is another ASX 200 share worth watching. There are certainly challenges facing Telstra this year but we could see the 5G network push accelerated.

More working from home means more reliance on network infrastructure. That could be good news for Telstra as it looks to re-shape itself and re-define its strategy for the decades ahead.

Foolish takeaway

These are just a few of the ASX 200 shares that I like the look of right now. If you have $20,000 to invest, it might be wise to focus on portfolio construction.

No two scenarios are the same which means you have to create a portfolio that suits your needs and investment horizon.

More reading

• 2 ASX shares to buy for strong retirement income
• Top brokers name 3 ASX shares to buy next week
• How you can get very rich with ASX 200 shares
• Can gold really protect your ASX share portfolio?
• How I would build a $100,000 ASX portfolio with ETFs

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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.

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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Adairs Ltd (ASX: ADH)

According to a note out of Goldman Sachs, its analysts have upgraded this homewares retailer’s shares to a buy rating with an improved price target of $2.40. The broker likes Adairs due to its strong online business, solid product offering, and improving supply chain. It also believes its shares are very cheap at 13x forward earnings. I think Goldman Sachs makes some great points and Adairs  could be a good option for investors.

Nearmap Ltd (ASX: NEA)

Analysts at Citi have retained their buy rating and lifted the price target on this aerial imagery technology and location data company’s shares to $2.60. According to the note, the broker was pleased with its market update and was impressed with the resilience of the business. And while it suspects that FY 2021 will be tough, it remains positive on its longer term outlook. I agree with Citi and think Nearmap would be a great buy and hold option.

Telstra Corporation Ltd (ASX: TLS)

A note out of Credit Suisse reveals that its analysts have retained their outperform rating but trimmed the price target on this telco giant’s shares to $4.10. Although the broker expects the pandemic to negatively impacts its earnings, the damage isn’t enough for it to change its bullish stance. It feels its shares are cheap at the current level and continues to forecast a 16 cents per share dividend over the near term. I think Credit Suisse is spot on and would be a buyer of Telstra’s shares.

More reading

• The best ASX blue chip shares to buy in June
• Here’s why it’s vital your ASX shares have a moat
• The TPG share price is up 26.68% in 2020. Too late to invest?
• The Nearmap share price is up 123% in 2 months: Why I think it can go higher
• Brokers name 3 ASX 200 shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. and Telstra Limited. 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.

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