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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:
05 November 2024
Of the experts surveyed by Finder for September :
100% correctly predicted the cash rate would hold.
Graham Cooke - Head of consumer research
The good news is that a rate cut is looking much more likely this side of Christmas, following the US Federal Reserve slashing American interest rates by 50 basis points.
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.
Inflation in Australia is still above target (despite Australia having the highest inflation target in the world) and there is no need to stimulate jobs, as unemployment is not high. We have near full employment, evidenced by strong wages growth.
The latest data makes the case for the Reserve Bank to keep the cash rate on hold. ABS data showed that inflation is trending down, and the seasonally adjusted unemployment rate rose slightly in July. Data also points to interest rates affecting the economy as intended, with the ABS Australian National Accounts showing that outside of the pandemic, the economy recorded the slowest annual financial year economic growth since FY92.
Monetary policy is firmly on hold although the RBA should be in a position to start cutting official rates in early to mid 2025. Other central banks are now steadily reducing rates, but our cycle appears to be around 6-9 months later.
Current economic conditions justify a watchful hold therefore we see cautious non-action at the Sept meeting. Following RBA officials' comments, it is clear the RBA is in no rush to ease policy rates. Unless data in the upcoming months forces RBA's hand to act sooner, a pivot is most likely expected in 1Q25.
Recent growth, unemployment and other indicators suggest a continued economic slowdown. The latest monthly CPI shows a slight decline but inflation remains above the RBA's target. With limited new inflation data since the last meeting, the RBA is likely to hold the cash rate until more information becomes available.
Another month of mixed signals. On the one hand, inflation remained too high, propped up by high public-sector spending. On the other hand, the private sector continued to weaken. Bank is almost certain to remain in a holding pattern.
Almost all other major central banks have begun easing their monetary policy. We cannot afford the resulting strong exchange rate at this stage.The weakness in Australia’s exports to China means our luck has run out. Business investment and consumption are already feeble. By November, I expect the portents of a severe recession in 2025 will compel the RBA to walk back its anti-inflation commentary and begin cutting the cash rate. If they don’t, they risk damaging the economy as well as their hard-earned reputation as effective macroeconomic managers.
The RBA is sticking to its hold and hope strategy. Given very little guidance about a potential hike and the push back from the central bank about future cuts, there's little reason to think there'll be a surprise rate rise.
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 general softness in recent economic data, inflation remains elevated. The RBA will keep rates on hold until they are confident they have beaten inflation.
I think the RBA will hold the cash rate constant to maintain downward pressure on inflation. There are downside risks that the RBA will be monitoring carefully but I don't think those risks merit a rate cut at this stage.
The Reserve Bank of Australia maintains that its number one enemy is inflation and even though inflation is slowly falling, it's not falling as quickly as the RBA had hoped. With our economy slowing and many households on the edge of mortgage stress, more rate rises in 2024 are off the cards. If the economy evolves broadly as anticipated, the board does not expect that it will be in a position to cut rates in the near term, so early next year is when rates are likely to start falling.
I've had the view since November 2023 that the RBA would leave rates unchanged during 2024, and not start cutting them till February 2025 at the earliest, irrespective of what other central banks did. That's because I concluded, as the RBA has since (beginning with the minutes of the March Board meeting) confirmed, that they had consciously opted to tolerate inflation being above their target band for longer than their peers (the Fed, BoE, BoC and RBNZ) were willing to tolerate inflation being above their respective (and lower) targets, in order to preserve as much as they could of the gains made in reducing unemployment and under-employment during 2021 and 2022. And so having not put interest rates up as much as their peers, inflation hasn't come down as quickly but unemployment hasn't risen as much as in the US, UK, Canada and NZ - so rates won't come down by as soon or as much as in those countries. Especially when you also take account of the fact that Australians, unlike Americans, Brits, Canadians and New Zealanders, are getting tax cuts worth (in terms of their impact on aggregate household cash flows) two 25 basis point rate cuts in the current half year.
Short of substantially higher unemployment, lower underlying inflation or a financial shock the RBA is likely to remain on hold in the next few months as it still sees too much excess demand and inflation. But easing demand, employment and inflation are likely to drive rate cuts from February.
Inflation is currently at 3.8%, which remains well above the RBA's target range. Consequently, interest rates need to remain high to help curb spending. Unless Australia experiences a significant recession before the end of this year, the RBA is likely to keep interest rates on hold at least until February next year.
Inflation is till too "sticky" to cut the policy rate now but should abate sufficiently in the wake of tepid activity growth to alow easing by February.
We're over it! ... and we're going down soon! My forecasts are centred at HOLD for this month. We have just pasted the times of a high probability of RAISE as it went down from over 70 per cent in July to less than 50 per cent for the upcoming meeting. For the first time, my forecasts indicate a decisive CUT for December, as the predictive interval for that month does not include the current cash rate level. You can access these forecasts at https://forecasting-cash-rate.github.io/
Both inflation and the unemployment rate are around 4%. GDP growth is flattish, and the global economy is sub-par. That combination should see the RBA keep the cash rate unchanged at 4.35% at the September meeting
Inflation (July figure: around 3.5%) is still above the target range of 2 to 3 %, while economic growth is sluggish (1.1% growth). Despite the slowdown in the Australian GDP growth rate, the Australian economy has so far avoided the classical recession. Though the per capita income growth is negative, the unemployment rate is within the acceptable level, and the wage growth rate is keeping pace with inflation. These indicators suggest that the RBA is likely to maintain the cash rate.
Recession is now a real possibility and it has become clear that the rate rise cycle has had a significant impact on dampening household expenditure. Inflation may not yet be within the target range but it is heading in that direction, and other economic variables point to the next rate movement being down.
I think the RBA will hold interest rates steady. Inflation has fallen and is expected to reach the top of the target by the end of the year. Barring any large shocks to the economy I think the RBA will want to wait and see if inflation returns to target.
The RBA has made it clear that they are unlikely to cut rates until 2025 unless there is a material change to their forecasts of inflation and economic conditions. I anticipate that more favourable progress on headline inflation for Q3 beyond the temporary effects of energy rebates and heightened worries about global economic conditions, especially related to China, but also with decreasing interest rates for many other countries, will motivate the RBA to start cutting in December of this year. However, they are not likely to cut more than three or four times unless conditions deteriorate much more rapidly than expected, such as a sudden spike in the unemployment rate. The limited number of cuts is because the RBA will be waiting to see the effects of these initial cuts to determine where the neutral level of interest rates is. Given likely ongoing weak productivity growth, I suspect neutral is a bit lower than the RBA might be currently expecting, so there could be a few further cuts later in 2025.
As the the inflation has been coming down, although slowly, the RBA is still likely to wait rather than change the rate to balance both risks, risks to inflation and the labour market.
The RBA has noted that the data doesn't justify easing policy this year, specifically inflation remains uncomfortably high. We expect that it takes further time for the RBA to be confident inflation and once it has that it will look to support the economy and labour market.
Inflation is still above target. There are still a number of factors that could keep inflation elevated, e.g. low unemployment, strong population growth, rent and electricity prices could continue putting upward pressure on inflation, government spending and infrastructure projects could continue supporting wage growth. Notwithstanding the potential for a major national/international shock in the opposite direction, the RBA is not yet confident about the trajectory of inflation.
As I have said for some time now, The Federal Government's fiscal policy has helped fuel inflation such that I cannot see rates reducing anytime soon. In fact, I suspect there is the real possibility rates will rise this year if the inflation rate remains where it is today. Whilst the federal government and RBA should act independently they need to act co-operatively. This is not happening, largely because of the governments obsession with spending, as a means to help prop up GDP. Their approach fails to recognise per capita GDP is actually falling, meaning every Australian is worse off. The government's response (like providing one-off energy rebates) is like trying to hold the ocean back with a bucket - it just won't work.
My view is that the RBA will need to see inflation continue to fall into the target band, they have indicated strongly that there have still been conversations in regard to increasing rates rather than decreasing. Soft GDP and employment data helps mount a case for a cut, however until inflation returns to the target band, I don't see there being any discussions on a reduction to the cash rate.
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.
Calculate how much a cash rate rise will impact your home loan repayments
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 meets 8 times a year, in February, March, May, June, August, September, November and December. It is here that the board makes a decision on the official cash rate target.
The board used to meet 11 times a year, on every first Tuesday of the month apart from January. It lessened the number of times it meets to provide more time for change between meetings.
However, the RBA can alter the cash rate at any time outside of the meetings. 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
Mortgage holders are bearing too much of the brunt of the RBA’s effort to bring down inflation, according to the majority of panellists in Finder’s latest poll.
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 553 Finder guides across topics including:
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