* Westpac predicts RBA cash rate cut to 0.1% from 0.25% now
* Expects cut to 3-year bond yield target to 0.1% from 0.25%
* Aussie dlr slips to 1-month low
* 3-year bond yields slide to 0.166% (Adds market reax, comment)
By Swati Pandey
SYDNEY, Sept 23 (Reuters) - Westpac WBC.AX economist Bill Evans said on Wednesday he expects Australia's central bank to cut the cash rate and the three-year bond yield target to 10 basis points at its Oct. 6 board meeting from 25 bps now.
The Australian dollar AUD=D3 fell on prospects of further monetary easing to a one-month low of $0.7128. Yields on three-year bonds AU3YT=RR slid to 0.166% from 0.221% on Tuesday.
The change in view follows a speech by Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle on Tuesday where he signalled the likelihood of more monetary easing. "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," Evans said.
Westpac also expects the RBA to extend bond purchases in the five- to 10- year maturity range, from three-years now.
"The theme is likely to be, as we saw in March, a 'Team Australia' moment where the Reserve Bank is directly supporting a bold Federal Budget," Evans said, adding the prospect of the RBA sitting back to assess the budget was not appropriate during these "unique times."
The RBA last slashed interest rates to a record low 0.25% in an emergency meeting in mid-March to backstop the economy from the coronavirus crisis. It also launched an "unlimited" bond buying programme and a cheap funding facility for the country's lenders.
On its part, the government has announced more than A$200 billion ($142.56 billion) in support measures, including a wage subsidy scheme, and is likely to announce further spending plans at its Budget next month. ($1 = 1.4029 Australian dollars)