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.
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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.
Inflation is easing but not quite done yet: headline CPI fell to 2.4%, and trimmed mean is at 2.7%—both now within the RBA’s 2–3% target band. But the RBA has said it wants confidence that inflation will stay there sustainably. Some sticky services inflation may make them cautious about cutting too soon.
Having correctly predicted the last cut, my forecasting system has settled on an uncontroversial HOLD prediction for the RBA’s April meeting. Regarding the interest rate’s values for the next year’s horizon, one needs to consider the world’s political uncertainty and its impact on inflation and economic activity in Australia. Providing the mid-term cash rate trajectory will not be possible before another two or three rate cuts. My forecasts are available at: https://forecasting-cash-rate.github.io/
I’m predicting that at its April meeting, the Reserve Bank Board will vote to hold the cash rate. It takes some time to see cash rate changes reflected in the economy, and the RBA will want to see the impact of the February rate cut flow through before delivering further relief.
I think that the RBA will take a wait and see approach after the previous cut in the cash rate. I think they want to be more confident that inflation is falling before making another cut.
In explaining its last decision, the Board indicated that it would take a cautious approach to further rate cuts. Given that the economic data does not currently provide a strong case for further easing, it is likely that the cash rate will remain constant for now.
As well as sustained cost of living pressure and moderating inflation, the unexpected hit to employment figures has widened the window of opportunity for the RBA to cut rates, which it is expected to do in coming months anyway. It might be prudent to act now.
The RBA gave the market a clear signal in February that hopes for more rate cuts in the near future need to be tempered. We think that advice can be taken at face value.
Another rate cut coming soon but not just yet—it’s not urgent, & the Bank will want to keep a low profile during the election campaign. By the same token, February’s significant fall in full-time employment heralds downward pressure on inflation. Likewise, February’s inflation print was lower than expected.
I expect the RBA to hold the cash rate steady in April, with inflation easing and employment still solid, though softening. In property markets, the last rate cut lifted buyer confidence and auction clearance rates, but the sugar hit is now starting to moderate.
The somewhat faster drop in underlying inflation compared to the RBA forecast was the main justification for a drop in the cash rate by 25 basis points. There is no obvious new information to suggest an immediate need to cut again at this meeting. The labour market remains tight, while the very high level of global uncertainty around trade policies and inflation would argue for waiting and seeing what data materialise to support further cuts or not.
The RBA's decision to reduce rates last time around was premature. Domestic inflation is still a problem; the government has signalled inflationary spending to help it win re-election; the artificial reduction in electricity prices due to government subsidies will be less impactful; and the tariff war with the US will likely add inflationary pressures.
The rate cut that finally came was a reluctant one and there still no evidence that inflation pressures are coming down strongly. It would be a brave reserve Bank that dropped rates once again with an election a few weeks away at most.
The RBA are likely to keep rates on hold in April despite further evidence of moderating inflation, and wait for the quarterly CPI data (due April 30th) to confirm the next cut on May 20.
Monthly inflation readings have fallen precipitously and the Dec quarter CPI report showed headline inflation within the RBA's target range. While underlying inflation is still slightly above the target range, the trend since Dec quarter 2022 has been consistent decline. Any temptation to further reduce the cash rate will be tempered by any upward pressure on house prices, continued full employment and any geo-political inflation shocks. The RBA will likely only move to cut rates further once convinced that underlying inflation has settled in the 2-3% range. With an upcoming federal election, the RBA is probably done easing for now.
The new MPC will be waiting more data on the extent to which inflation and in particular its preferred measure of 'underlying' inflation has continued to fall.
I am not convinced a cut was warranted in the last meeting, as the economic data doesn't really suggest it was required. However, with the macroeconomic climate, never say never on anything.
Given the current economic landscape, it seems highly likely that the Reserve Bank will choose to hold interest rates steady at their next meeting. The decision to maintain rates is often driven by a need to assess the lagging impact of previous rate changes on the economy. With the bank will be keen to observe how the recent rate drop filters through various sectors, including housing, retail, and manufacturing, before making further adjustments
The headline inflation rate seems settled within the target range. While core or underlying inflation measured by the trimmed rate is just above the range, more sophisticated statistical measures (eg from dynamic factor modelling) indicate that it is in the range. With the escalating global tariff war and the likely weakening of global economic activity, the RBA should act now in anticipation. The Board will be torn between the risk that inflation is not fully under control and the risk of a future downturn and recession. The RBA is marginally more likely to cut the cash rate again than to hold in April 2025.
The RBA may decided to wait and judge on the impact of the Feb cash rate cut before moving again, and will also be assessing the fiscal environment in the run-up to the election.
The Reserve Bank of Australia (RBA) may decide to keep the cash rate unchanged in April, taking a wait-and-see approach as it evaluates the effects of the recent fiscal policy measures announced by the Australian Federal Treasurer. These targeted expansionary fiscal policies are designed to alleviate financial pressures on households but could also lead to inflationary spending. Therefore, by maintaining the current interest rate, the RBA can better assess the impact of these fiscal measures.
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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
Economists had already predicted 2 or 3 more rate cuts in 2025, but with the fallout from the US trade tariffs it's now expected that there could be more cuts. What will this mean for Australian borrowers?
The RBA has met for the second time this year, deciding to keep the cash rate on hold at 4.10%. Only 2 economists in Finder's RBA panel thought the RBA might cut this month.
Despite years of high-rate pain, many lenders have yet to announce plans to drop their rates for stressed mortgage holders, according to new analysis by Finder.
Aussie homeowners could be in for some much needed mortgage relief with the majority of experts predicting a rate cut from the RBA at its first meeting of the year.
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 608 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