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RBA cash rate
Are rates going up or down? What will the next RBA interest rate decision be? Get the latest cash rate predictions and insights from 40+ experts.
The Reserve Bank of Australia sets the official cash rate target. This is a benchmark rate that has a big impact on home loan interest rates, savings accounts and other credit products.
The official cash rate is currently:
4.35%
The RBA's next interest rate decision is on:
6 August 2024
Of the experts surveyed by Finder for June:
100% correctly predicted the cash rate would hold.
Graham Cooke - Head of consumer research
The inflation rate is the one number the RBA is most influenced by, so it's unlikely we'll see a rate cut until at least December, if not later.
Finder regularly surveys 40+ economists and property experts to forecast the RBA's next cash rate decision and get insights into the future of the Australian economy. Here are the most recent cash rate predictions.
I believe the economy has been weak enough that the RBA won't change rates this month, the next CPI data release will be a key determinant of rate changes.
The RBA will maintain its restrictive monetary policy setting with no change to the cash rate in June, and are still unlikely to be in a position to cut rates until early next year.
Mixed data since the last meeting of the Bank board. A bad monthly inflation report alongside better news on whether the economy is slowing sufficiently. The Bank will probably sit on its hands for the next several months.
The outlook for Aussie inflation has gotten a little murkier of late. With inflation digging in its heels, the government is ramping up spending to bring it down faster. The government (and RBA) hopes the rebates will lower inflation, first by temporarily lowering the price in the CPI, and secondly by tempering inflation expectations. Treasury expects the rebates to shave 0.5 percentage point from the headline inflation rate in the year to 30 June, 2025. And it's probably not wrong. But the big question is what it does to underlying inflation—the Reserve Bank of Australia’s preferred measure of inflation, which strips out volatile items, often food and energy. These impacts are much less clear. It will all depend on how much of the energy rebates gets spent, and how much gets squirrelled away into savings. If they're spent, it would add to demand at the exact same time the RBA is trying to take it out, adding to underlying inflation even if the headline figure comes down. What’s more, the rebate comes at the same time as a slew of similar rebates from state governments and the reworked stage-three tax cuts, which are set to hand the average worker a tax reduction of A$1,500. All that will ensure the RBA stays put for a little longer; its next move will be down, but we’ll have to wait a little longer. The board will be cautious not to pull the rate-cut trigger too early, what with large amounts about to hit bank accounts. We see rates staying where they are until December, when a 25-basis point cut will take the cash rate to 4.1%.
The FED fund rate is still more than 1% point about the RBA cash rate and the increasing worldwide government debt-GDP ratio is keeping upward pressure on interest rates
Despite recent cuts by the Bank of Canada and the ECB, the RBA will want to see further progress on inflation coming back to target, including in underlying measures, before starting a cutting cycle. The RBA did not raise rates as high as the Bank of Canada. While the policy rate is clearly having an effect on dampening the domestic economy, it has not had as much effect as in Canada in bringing inflation back down to target. I think it is unlikely that the RBA will raise rates given the weakness in the economy even if some measures of inflation show a small reversal upwards in the coming months.
GDP growth in the 1st quarter of 2024 was very weak, and may well be negative in the 2nd quarter. As a result, underlying wage and price inflation should moderate, allowing the RBA to cut the cash rate in September and in November.
While there continues to be debate, not mention signals and the markets and data, that policy isn't sufficiently restrictive, the RBA's priority remains balancing the risks to the labour market and inflation. The central bank will stick with its hold and hope strategy for as long as it can.
Inflation remains above the RBA's target band despite moderating in recent months. House prices appear to have significantly decoupled from incomes and shrugged off the rate increases to date. As long as low unemployment (effectively full employment) persists, the cash rate is unlikely to be reduced and further increases remain a possibility.
Despite the latest monthly CPI being somewhat "sticky," other economic indicators suggest a slowdown in employment markets, household spending, and overall growth. This combination of results should see the RBA to keep rates steady.
Although inflation is still stubbornly high, the RBA is likely to hold the cash rate constant in the near term. There are signs of weakness in the economy, and the full impact of past rate hikes is yet to be fully felt.
The economy is on the brink of recession. The unemployment rate is rising. Inflation is falling, even if gradually. The RBA will be in a position to ease in support of the economy later in the year, without unduly rekindling inflation.
A rate cut from the RBA is unlikely until the end of 2024 or early 2025. They'll likely wait to see a clearer path on inflation before making any moves in either direction. inflation still remains significantly above their target range, however our economy is slowing considerably and we are experiencing a capital recession which will keep economic activity low until the cost-of-living crisis comes under control.
Despite the economy flying just above stall speed, the RBA may feel the need to stay the course. especially as the fiscal side looks relatively 'easy'?
There is no justification to reduce rates based on current economic data. In fact, its quite the opposite. The pendulum is swinging towards an increase becuase of sticky inflation and a government fiscal policy which is likley to put upward pressures on inflation. Plus, I doubt there is a single Australia right now who is not suffering from sustained and ongoing price increases in such areas as utility/energy, health, food and just general living costs. By way example, many charities cannot keep up with demand due to an increasing number of families struggling to to put food on the table or cover essential living expenses. The possibility of another rate increase is on the cards and that will push many mortgage borrowers over the edge, and take many other Australians with them.
Inflation figures still too high for RBA target and proving tricky to get down. Likely that they will hold for remainder of year with chance of first cut in December or early next year
I think it would take a lot - a 'material' increase in the underlying inflation rate in the near term, or a good reason to extend beyond mid-2026 how long it's expected to take for inflation to reach the mid-point of the target band - to prompt the RBA to raise rates again. But if inflation persists at its current level for longer, as opposed to continuing on a generally downward trend (with the occasional interruption), then the RBA would very likely delay any cuts in interest rates.
Cost pressures remain elevated in the services sector. The CPI disinflation to date has been relatively swift, but the remainder of the path back to the target range could be bumpy. Subsidies announced in the budget will lower headline inflation in the near term. But the RBA will be focussed on core inflation - and the loosening of policy is otherwise stimulatory at a time when the RBA is looking to take some steam out of the economy. We now see the first cash rate cut coming in early 2025.
Following recent higher than expected inflation data the RBA still lacks the confidence to start cutting rates and so will hold for the next few meetings, with the risks still being on the upside for rates. But weaker growth and lower infaltion should allow a cut by year end.
Australia's economy grew by a mere 0.1% in the first quarter of the year, marking the slowest growth since the end of the pandemic, according to the ABS.
Weaker labour markets will leave the RBA on hold even as inflation proves "sticky". Inflation should be on a clearer downward path by year-end or early 2025
Inflation will be increasingly sticky. Embedded inflationary pressures are increasingly evident. Fiscal policy will continue to add to inflationary pressures, especially through the cost of labour. The RBA will disregard the impact of fiscal measures that mitigate 'cost of living pressures' on inflation. Ongoing
Yeah, nah! It's interesting! My forecast shows only a 60% probability of the cash rate increase in June but as much as a 75% chance in July. Additionally, the multivariate models for weekly data have the cash rate's current level out of the forecast intervals, indicating a decisive increase. However, the pooled forecast of weekly and monthly data using multi- and uni-variate models says HOLD. The election-year budget could generate inflationary pressure, requiring interest rate increases. However, it's reassuring to note that the government and the RBA are in sync in their view of inflation projection and the means of reaching the target. This alignment, clearly communicated and accepted by the audience, which is reflected in my forecasts. You can access these forecasts at https://forecasting-cash-rate.github.io/
What is the official cash rate?
One of the Reserve Bank's primary roles is setting monetary policy for the Australian economy. This involves setting the cash rate (or to use its full name, the official cash rate target).
At a technical level, the cash rate is actually the interest rate banks pay for borrowing money from each other overnight. Banks use this to manage liquidity and issue funds as needed.
Australian banks can borrow and deposit money with the RBA at just below the current cash rate target.
How the official cash rate target affects interest rates
But for the average Australian consumer, the cash rate is really useful as a broad benchmark for the interest rates on home loans and savings accounts. A high cash rate makes borrowing money more expensive and sees home loan repayments rise.
A low cash rate makes it cheaper to borrow money. This boosts borrowing and spending.
How has the cash rate changed over time?
The Reserve Bank adjusts the official cash rate target over time in response to various economic data, including:
Inflation
The unemployment rate
Global economic factors
The cash rate stayed at the then record low of 1.50% from 2016 to 2019, when the RBA lowered it further in response to low inflation and slightly higher unemployment.
Then as the Covid-19 pandemic began to hurt the Australian economy the RBA dropped the cash rate even further. This was to make borrowing cheaper and stimulate a struggling economy. The cash rate hit the record low of 0.10% during this time.
Now, with inflation soaring the RBA has lifted the cash rate very quickly to try to slow demand and curb price rises.
The graph on the left below shows movements in the official cash rate over time. And the graph on the right shows the market's lowest home loan rates. You can see how the market responds by raising or lowering rates broadly in line with the RBA's decisions.
How does the RBA's cash rate decisions affect your finances?
The RBA can do 3 things with the cash rate: Raise, lower or hold the cash rate at its current level.
If the RBA lifts the cash rate
When the cash rate rises, most lenders pass on the rate rise to borrowers on variable rate home loans.
If the cash rate rises by 25 basis points, then most borrowers will see 25 basis points added to their home loan's interest rate.
If you have a fixed rate home loan nothing changes. Your rate is locked in for the duration of the fixed period.
When the RBA lowers the cash rate, most lenders pass on some if not all of the cut to borrowers on variable rate home loans.
Banks also lower rates on savings accounts and other products.
If you have a home loan, it's a good idea to check if your lender has actually passed on the rate cut to you. If it hasn't, you may need to switch.
If the RBA holds the cash rate
A hold decision means the cash rate isn't changing this month. This means that your home loan or savings account rate likely won't change. You don't really have to do anything.
But banks and lenders change interest rates all the time for various reasons even if the RBA doesn't move the cash rate.
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Enter your loan amount, current interest rate and the latest cash rate increase to quickly estimate how much your monthly repayments will increase.
Example: how changes to the cash rate can change your loan repayments
You have a $600,000 home loan with a variable interest rate of 6.00%. It's a 30-year loan term with principal-and-interest repayments.
Your monthly repayments are $3,598.
⬆️ If the cash rate rises by 25 basis points your interest rate would increase to 6.25%. Your monthly repayments would now be $3,695. This would cost you an extra $97 a month or $1,164 a year.
⬇️ If the cash rate decreases by 25 basis points your interest rate would fall to 5.75%. Your monthly repayments would now be $3,502. This would save you $96 a month or $1,152 a year.
More questions about the RBA cash rate
Lenders are free to change interest rates on their products whenever they want. The cash rate is a big influence on rates, but there are many other factors. This includes a lender's own funding costs, the amount of deposits the lender has and how competitive it wants to be to attract new customers.
The RBA changes the cash rate target based on a range of factors including inflation, the performance of the Aussie dollar, unemployment, the housing market, and Australia's Gross Domestic Product (GDP).
For example, if inflation rises above the target rate it means that Australians are spending their money too freely and prices are increasing too rapidly. But if the RBA raises interest rates to make it more expensive to borrow money, the economy will settle and price increases will slow down.
Conversely, the RBA will drop interest rates if inflation is too low and the economy is stagnating, encouraging more Australians to spend more money and stimulate economic growth.
The Reserve Bank of Australia is the country's central bank. The RBA's monetary policy has three key objectives which are set out in the Reserve Bank Act 1959:
The stability of the currency of Australia.
The maintenance of full employment in Australia.
The economic prosperity and welfare of the people of Australia.
Setting the official cash rate is one of the bank's key tools to influence monetary policy, inflation and the broader Australian economy. The bank's board meets on the first Tuesday of every month except January to set the cash rate. The RBA will either cut, raise or hold the cash rate.
The RBA's board of governors typically meets 11 times a year, on the first Tuesday of every month except January. It is here that the board makes a decision on the official cash rate target, which it announces at 2:30pm that day.
Starting in 2024, the RBA board will meet 8 times a year to decide the cash rate level. This means fewer changes to the cash rate than in previous years.
However, the RBA can alter the cash rate at any time. This is rare, but can happen. In March 2020, in response to the onset of the COVID pandemic, the bank cut the cash rate twice. Once at the scheduled meeting and then again mid-month at a special emergency meeting.
Check out more RBA news and Finder's RBA survey press releases
The May cash rate decision was no surprise for most economists, but borrowers waiting for their interest rates to fall may have to wait longer than was expected a couple of months ago.
Experts and economists have shared their key economic and financial predictions for 2021 as part of the latest Finder RBA cash rate survey. All 40 correctly predicted that the cash rate would remain at 0.10% this month.
The Reserve Bank of Australia (RBA) today announced that it has slashed the cash rate by 15 basis points to a new historic low of 0.10%. Results from Finder's RBA Cash Rate Survey show that 67% of experts surveyed correctly predicted a rate cut.
Experts are predicting that the Reserve Bank of Australia (RBA) will announce a second rate cut for 2020 at the final meeting of the year, according to Finder.
Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio
Richard's expertise
Richard has written 529 Finder guides across topics including:
Almost a million homeowners could be forced to take drastic action if interest rates remain elevated until next year, according to new research by Finder.
When the RBA decreases the cash rate , does it mean it prints more money to increase money supply and thereby decreasing the borrowing rate. And if that is the case, does increasing the cash rate mean that the RBA has to extinguish some of the money supply thereby reducing the money available to borrow. I am assuming that RBA can’t just simply say the cash rate is this much, it has to increase/decrease money supply at the backend to make sure the cash rate stays at whatever level it wants to stay at.
Finder
RichardJune 18, 2022Finder
Hi,
The cash rate determines the interest rate lenders can charge when lending money to each other at short notice (also called the overnight cash rate). Lenders and banks are always moving money around to cover different investments and expenses, including funding for home loans.
So the cash rate affects their costs, and they pass this onto borrowers. Changing the cash rate target does nothing to the amount of money in the economy. It affects the cost of borrowing and lending money.
The RBA does in effect create money sometimes, in a process called quantitative easing. This involves purchasing bonds from investors at a favourable rate, freeing up investor cash to go elsewhere in the economy. This is different to the cash rate.
I hope this helps.
Regards,
Richard
octoJune 18, 2018
how long can AUD interest rate remain Low…..?
how soon will the AUD follow the US FED Rate Hike…….?
thank you
NikkiJune 20, 2018
Hi Octo!
Thanks for getting in touch!
To know more information on your questions, you can fill in your email address in the box provided and you’ll be updated on RBA’s decisions on the official cash rate target.
While we provide you with general information, please know that we don’t stand as a representation for RBA or any company featured on our site.
Hope that clarifies!
Cheers,
Nikki
TaneeshaMay 24, 2018
Do you think the cash rate will stay the same at the June RBA meeting?
Finder
JoshuaMay 24, 2018Finder
Hi Taneesha,
Thanks for getting in touch with finder. I hope all is well for you. :)
Unfortunately, we are not in the best place to make a prediction. However, you might get an idea whether the RBA cash rate will rise or fall by looking at the factors that affect it. These factors may include:
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
BrookMay 5, 2018
What do you think that how the international economic condition influence the cash rate?
Finder
JeniMay 6, 2018Finder
Hi Brook,
Thank you for getting in touch with Finder.
This is a nice question. Domestic financial conditions remain expansionary. There has been some tightening in short-term
money markets, which has flowed through to a small increase in funding costs for a range of financial institutions and businesses. However, borrowing rates remain low for households and businesses. Growth in housing credit has eased since mid last year, particularly for credit extended to investors, while growth in business debt has remained moderate. The Australian dollar remains within its narrow range of the past two years. Financial market prices suggest that the cash rate is expected to remain unchanged this year and to increase around mid 2019. If you are eager to learn more about the domestic financial condition according to RBA, refer to the Domestic Economic Conditions file.
I hope this helps.
Have a great day!
Cheers,
Jeni
RobJune 11, 2017
What do you think will be the next move for RBA on cash rate and when?
Thank you!
JonathanJune 11, 2017
Hi Rob!
Thanks for the comment.
As of the moment, most of resident rate experts predict that rates will be the same. The cash rate target is released on the first Tuesday of every month except January.
Thanks Jonathan, I meant in the longer term, 6-12 months.
JonathanJune 11, 2017
Hi Rob!
We appreciate your follow-up.
Currently, there are multiple factors that need to be considered and due to the volatility of these factors, it is a bit hard to conclude whether they’ll leave the rates unchanged for the next few months or not.
If you have further inquiries, you may contact:
Media and Communications
Secretary’s Department
Reserve Bank of Australia
SYDNEY
Phone: +61 2 9551 9720
Fax: +61 2 9551 8033
Email: rbainfo@rba.gov.au
Hope this helps.
Cheers,
Jonathan
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When the RBA decreases the cash rate , does it mean it prints more money to increase money supply and thereby decreasing the borrowing rate. And if that is the case, does increasing the cash rate mean that the RBA has to extinguish some of the money supply thereby reducing the money available to borrow. I am assuming that RBA can’t just simply say the cash rate is this much, it has to increase/decrease money supply at the backend to make sure the cash rate stays at whatever level it wants to stay at.
Hi,
The cash rate determines the interest rate lenders can charge when lending money to each other at short notice (also called the overnight cash rate). Lenders and banks are always moving money around to cover different investments and expenses, including funding for home loans.
So the cash rate affects their costs, and they pass this onto borrowers. Changing the cash rate target does nothing to the amount of money in the economy. It affects the cost of borrowing and lending money.
The RBA does in effect create money sometimes, in a process called quantitative easing. This involves purchasing bonds from investors at a favourable rate, freeing up investor cash to go elsewhere in the economy. This is different to the cash rate.
I hope this helps.
Regards,
Richard
how long can AUD interest rate remain Low…..?
how soon will the AUD follow the US FED Rate Hike…….?
thank you
Hi Octo!
Thanks for getting in touch!
To know more information on your questions, you can fill in your email address in the box provided and you’ll be updated on RBA’s decisions on the official cash rate target.
While we provide you with general information, please know that we don’t stand as a representation for RBA or any company featured on our site.
Hope that clarifies!
Cheers,
Nikki
Do you think the cash rate will stay the same at the June RBA meeting?
Hi Taneesha,
Thanks for getting in touch with finder. I hope all is well for you. :)
Unfortunately, we are not in the best place to make a prediction. However, you might get an idea whether the RBA cash rate will rise or fall by looking at the factors that affect it. These factors may include:
– Household debt
– Inflation
– Wage growth
– Consumer Confidence Index
– Unemployment
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
What do you think that how the international economic condition influence the cash rate?
Hi Brook,
Thank you for getting in touch with Finder.
This is a nice question. Domestic financial conditions remain expansionary. There has been some tightening in short-term
money markets, which has flowed through to a small increase in funding costs for a range of financial institutions and businesses. However, borrowing rates remain low for households and businesses. Growth in housing credit has eased since mid last year, particularly for credit extended to investors, while growth in business debt has remained moderate. The Australian dollar remains within its narrow range of the past two years. Financial market prices suggest that the cash rate is expected to remain unchanged this year and to increase around mid 2019. If you are eager to learn more about the domestic financial condition according to RBA, refer to the Domestic Economic Conditions file.
I hope this helps.
Have a great day!
Cheers,
Jeni
What do you think will be the next move for RBA on cash rate and when?
Thank you!
Hi Rob!
Thanks for the comment.
As of the moment, most of resident rate experts predict that rates will be the same. The cash rate target is released on the first Tuesday of every month except January.
You can follow the updated RBA forecast through our website.
Hope this helps.
Cheers,
Jonathan
Thanks Jonathan, I meant in the longer term, 6-12 months.
Hi Rob!
We appreciate your follow-up.
Currently, there are multiple factors that need to be considered and due to the volatility of these factors, it is a bit hard to conclude whether they’ll leave the rates unchanged for the next few months or not.
If you have further inquiries, you may contact:
Media and Communications
Secretary’s Department
Reserve Bank of Australia
SYDNEY
Phone: +61 2 9551 9720
Fax: +61 2 9551 8033
Email: rbainfo@rba.gov.au
Hope this helps.
Cheers,
Jonathan