How often does the Reserve Bank try for a sneaky Melbourne Cup rate change?

Posted: 28 October 2016 7:30 am


And how likely are we to get one next week?

The Reserve Bank of Australia (RBA) makes its monthly announcement about the official cash rate at 2:30pm on the first Tuesday of each month. Australia's favourite horse race, the Melbourne Cup, happens on the first Tuesday of November at 3pm, so there's the potential for a rate change to happen every single Cup day. But how often is that actually the case?

The cynical view is that any unpopular change will be announced to coincide with Melbourne Cup, because everyone's less likely to notice, what with all the booze and horses. But history does not bear this out.

Here's the full list of the 10 times that we've actually seen a rate change on Cup day during the modern RBA era (since 1990), and what happened:

2 Nov 2011Cut -0.25 to 4.5%
3 Nov 2010Increased 0.25 to 4.75%
4 Nov 2009Increased 0.25 to 3.5%
5 Nov 2008Cut -0.75 to 5.25%
7 Nov 2007Increased 0.25 to 6.75%
8 Nov 2006Increased 0.25 to 6.25%
5 Nov 2003Increased 0.25 to 5%
3 Nov 1999Increased 0.25 to 5%
6 Nov 1996Cut -0.5 to 6.5%
6 Nov 1991Cut -1 to 8.5%

With 10 rate changes out of a possible 27 in November, the odds of a rate change are just over 1 in 3. But even that figure is hugely skewed by the 6-year continuous run of Melbourne Cup Day rate changes between 2006 and 2011. That's what's likely to have created a perception that "Cup day" = "rate change", but for the past 5 years, we've seen no such change. Within those 10 years, a rise was much more common than a cut.

Ultimately, the RBA decision is driven by a complex set of market forces, but the fact a horse race happens to coincide with it once a year is not one of those forces. The expert consensus is that a rate cut next week is possible, but unlikely; 90% of experts surveyed by expect the rate to remain unchanged. And for the average mortgage holder, its relevance can be hard to gauge anyway.

There's increasing evidence that the rates we get charged don't bear much relation to the official cash rate anyway. Certainly when the rates were last cut in August 2016 very few banks passed on the full cut, and what cuts were made didn't happen immediately. While we're seeing some interest in launching tracker mortgages in Australia that do have a rate which reflects the official cash rate, that's still not going to be the dominant model.

So here's my advice: don't place your bet on the RBA making a cut (or a rise) just because it's Cup day. The odds will not be ever in your favour.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on

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