These graphs show movements in the official cash rate over time and changes to the market's lowest home loan rates over the same period. You can see how the market responds by raising or lowering rates broadly in line with the RBA's decisions.
How often are Finder's expert predictions correct?
The latest cash rate analysis from the experts
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.
Both headline and underlying (trimmed mean) inflation have now fallen within the RBA’s 2–3% target range — a key milestone that opens the door to possible rate cuts.
Unsurprisingly! In line with expert opinions and market expectations, the combined forecasts from my models indicate a decisive CUT of the cash rate in May. The predictive intervals do not include the rate's current value and include a 25bp cut. All the bond yield curve models' predictions align with these projections, and those that rely more on exchange rates or cash rate persistence do not. Longer-term scenarios will become more realistic after two or three more cuts. My forecasts are available at: https://forecasting-cash-rate.github.io/
Given inflation has continued to ease and is now sitting within the Reserve Bank's target band, I expect the RBA will cut the cash rate at its May monetary policy meeting. We've also seen a number of lenders reduce their fixed rate home loans recently, a sign that the market is anticipating that the cash rate will fall.
Trimmed mean CPI is back within the RBA's 2 to 3% target band and the central bank has scope to ease policy to take pressure off households and get ahead of a likely slowdown in global growth.
Expectations are that the RBA will decrease the cash rate. I think the RBA will be concerned about developments in the global economy and look to cut the cash rate for this reason.
Inflation continues to moderate, which creates space for a rate cut. The case for a cut is strengthened by the risks to confidence and economic activity posed by current global uncertainty and trade tensions.
With inflation moderating back to the Reserve Bank’s target range, and the global economy continue to grapple with the actual and potential fallout of a fluctuating tariff situation, household spending is constrained. This supports the case for a rate cut.
News from abroad on the tariff front has improved. But the economy will still need to weather a sizeable 'uncertainty shock' through Q2 at least. With upside inflation risks dissipating, the RBA can afford to lend the economy some more support.
The Bank will probably lower the cash rate because the latest data show that trimmed mean inflation is now within the target band and the labour market is slightly weaker.
At its last meeting, the RBA held steady seeking more evidence that inflation was sustainably returning to the target range. Since then, inflation has eased further, with both headline and underlying figures now sitting within the band. With a slight softening in jobs data, ongoing cost-of-living pressures and global trade uncertainty clouding the outlook, a May rate cut is highly likely.
Even underlying measures like 2.8% trimmed mean inflation have come back into the 2-3% target range in the latest reading. So the RBA can continue a gradual return to a neutral stance of policy. Global uncertainty and likely economic weakness due to tariffs also argues for cutting rates even if Australia is not so directly exposed to US tariffs. The US tariffs on China are likely to lead to cheaper prices of imports in Australia, so the RBA can forecast that inflation is likely to remain in the target range even if the government removes energy price rebates at some point.
The economic outlook is still a bit uncertain but there is considerable political and public pressure to reduce interest rates and this may hold sway with the RBA rate setting board
This is a difficult call but markets are pricing a cut in and inflation is now within the banks target range. But I say that with less than perfect certainty.
I expect the RBA to cut rates by another 25 basis points on May 20, with some risk of a larger cut (35 bp would be ideal) but in the absence of a sudden sharper downturn in global conditions a 50bp cut appears unlikely.
Monthly inflation readings have been falling precipitously for a while. The March quarter CPI report showed headline and underlying inflation within the RBA's target range. The RBA might be tempted to wait for further confirmation of this reversion of the trimmed (quarterly) mean to the target range. However, for this they would need to wait until next quarter's reading. The monthly readings have already been within the target range since late 2024. Given that the Federal election has been held, there seems to be little stopping the RBA moving to ease now.
While inflation has fallen substantially since the peak, the RBA board mentioned they needed to see sustainable progress towards the target band. Furthermore, wage pressures have reportedly eased which could give the RBA more confidence about a rate cut.
With the trimmed mean inflation measure very much in the target band and macro-economic issues caused by trade wars, there is a case that the RBA could do more, however given the economy is reasonably healthy they would probably exercise caution and decrease slightly.
Inflation has finally fallen within the RBA’s 2–3% target band, with underlying inflation now at 2.9%, and services inflation has cooled from 4.3% to 3.7%. Even energy price pressures are moderating.
Inflation is OK in line with projection). Policy is currently "restrictive". Downside risks to global growth and by extension Australian growth and inflation abound.
It’s been reasonably clear for awhile that inflation has stabilised within in the RBA’s target range. The RBA should immediately return the cash rate from being restrictive to its neutral level. The RBA may need to ease further later this year in the event of a global recession induced by the policy chaos of the White House.
Though “Trump Tariff” created lots of anxiety and uncertainty. Looking at some of Australia’s key indicators, they appear to be moving in the right direction. Inflation rate is within target i.e. 2.4% (12 months to the March quarter), while consumer spending remains unchanged and the selected living cost indexes are between 2.4% to 3.5% while business indicators are pointing to the right direction. Given these scenarios, I think the RBA will hold the cash rate this round.
Since the last meeting we have seen a further fall in underlying inflation to within the target range and wages growth in line with RBA forecasts adding to confidence inflation is falling sustainably to the mid-point of the target range. At the same time GDP growth looks to be running weaker than expected with flat consumer spending in the March quarter and global trade uncertainty poses a downside risk to the economic outlook.
The labour market remains tight, driving above trend wages growth. With no productivity growth, this puts unit labour costs above the RBA's inflation target
Given that the inflation rate is now well and truly in the RBA preferred band and the drag higher interest rates is having on the economic growth, and unsettled international economic conditions, the time is justified for a rate cut. I am predicting a 0.35% cut this month which will be followed by another 4 cuts over the next 12 months taking the cash rate to it's equilibrium level at 3%
With headline inflation sitting below the mid-point of 2.5% for two consecutive quarters and trimmed mean inflation breaching the target range in the previous quarterly print, the RBA should feel comfortable to deliver another 25bps cut.
Weak growth, low inflation and a softening labour market make thew current 4.10% cash rate too high - by a large margin. 50bp cut is needed.
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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.
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.
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.
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
Home loan borrowers and first home buyers will be breathing a sigh of relief after the RBA announced a cut to the cash rate for the second time this year.
The Reserve Bank of Australia (RBA) will meet on Tuesday 20 May to decide the cash rate. Most experts predict there will be a cut and some even think there will be a large 0.50% cut.
Richard Whitten is Finder’s Money Editor, with over seven years of experience in home loans, property and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Graduate Certificate in Communications from Deakin University. See full bio
Richard's expertise
Richard has written 611 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
Does the Reserve Bank try and sneak announce rate rises during the nation's biggest racing event? Here's what we know.
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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