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.
Without knowing next month's inflation figures it's difficult to predict the next move. But if inflation stays where it is or ticks up, there is a real possibility rates my rise again in March
There is a strong likelihood of an increase in the cash rate as inflation continues to rise without any signs of easing. The latest labour force statistics from the ABS indicate that the job market is tight, with the unemployment rate stable at 4.2%, underemployment at 5.9%, and participation at 66.8%. Until we observe consistent moderation in price pressures, the RBA is likely to maintain a hawkish stance.
With trimmed-mean inflation overshooting the RBA’s November forecasts, the labour market remaining strong (an unemployment rate of 4.1% per cent), and productivity growth sluggish, the RBA will need to raise rates in 2026. A February rate hike of 25 basis points is now likely, with a follow-up hike at the May meeting if data shows that inflation remains elevated.
It's a finely balanced decision, but while the year-to measures of both 'headline' and 'underlying' inflation are clearly above the top end of the RBA's target band, much of that appears to be attributable to the 'spike' in both measures in July (which in turn drove the spike in the September quarter), which the most recent data suggests has not continued - the seasonally adjusted trimmed mean rose 0.26% in November and 0.23% in December, which, annualized, are consistent with the on-going pace of 'underlying' inflation being at the top end of the target band. Which, given that at 3.6% the cash rate is still on the restrictive side of 'neutral', doesn't to me add up to an overwhelming case for making monetary policy more restrictive, ie for raising rates. I certainly expect that option will be on the table: but my hunch is that the MP Board will decide to leave it there rather than take it up.
The main problem is that although headline inflation has gone up, the trimmed mean has also ticked up. Even though the increase in the trimmed mean inflation is very small, it is still above the RBA's 2-3 percent band. This suggests that core inflation may not be 'under control' and action early prevent a series of hikes later in the year.
It’s a RAISE! And maybe for the better! Inflation readings consistently outside of RBA’s target convinced everybody about the inevitability of the RAISEs. That’s what my forecasts capture. The current cash rate value is decisively outside of the predictive interval and the mean indicates an increase in its value. My forecasts are available at: https://forecasting-cash-rate.github.io/
First, underlying inflation remains too high. While headline CPI was 3.8% in December, the trimmed mean was 3.3%, which is still above the RBA’s 2–3% target band. That tells the RBA inflation pressures are broad-based, not just driven by volatile items. Second, the labour market remains tight. The unemployment rate fell to 4.1% in December, which is close to full employment. This suggests the economy still has underlying momentum.
The RBA will take a slow and cautious approach to tightening policy from here. Inflation data was too spicy, but the trimmed mean was as expected and the central bank won't want to be seen as jumping at shadows.
It's a wild guess. I think Trump's excesses may finally spook the markets. It's already done a lot of harm to the real economy with US investment stalling except in data centres.
I think it’s a close call between either a 25bps rate hike or holding the cash rate constant. I think a hike is slightly more likely, as trimmed mean inflation is above the target range and the labour market is sufficiently robust that the RBA has scope to raise the cash rate a little without imposing large costs on the labour market.
The Bank will probably hike in February because, taken in conjunction with the latest labour market data, the latest CPI data were like the sound of the second shoe dropping. Government overspending, revealed by the latest MYEFO, suggests a hike in February is unlikely to be the last this year.
Inflation has lifted again, CPI is 3.8% over the year to December, trimmed mean is 3.3%, and unemployment is still just 4.1%, so the RBA may feel it needs to stay on the front foot. For the housing market, a hike should cool momentum rather than turn it. Demand remains supported by jobs, population growth, and active investors, while listings remain tight, so we may see decision time slow and price growth moderate, not a broad pull back.
With even trimmed mean inflation ticking up to 3.3% in 2025Q4 and the unemployment rate at 4.1% in December, the RBA will see its current stance of policy as not being restrictive enough. The neutral rate will be viewed to be slightly higher than previously thought. As a result, the RBA will show a clear response to inflation coming in higher than expectations to help bring the forecast back in to the target range over the next year or so. The stronger dollar will help with inflation, as will the effects of energy rebates ending eventually working their way out of headline inflation (higher electricity prices as a result of rebates ending was a major reason headline inflation ended up so high at 3.7% in 2025Q4). I suspect this high inflation will mean the RBA will also move in March, but will then wait and see if a somewhat more restrictive stance (and stronger dollar) has desired effects. By signalling that rates may go up further, the announcement will be seen as somewhat hawkish, although it will be interesting to see if the current market path of expectations for interest rates will be sufficient to bring forecasted inflation back to the target range in a timely enough manner.
The latest inflation numbers together with the recent strong jobs data leaves the RBA in a very challenging position as core inflation has risen to 3 1/3 %; so while I expect a close call the chances of a February hike are now above 50%.
Headline inflation now reaching 3.8% with underlying inflation at 3.3% signal to us that the RBA board may be forced to increase cash rate to meet the target 2-3% band once again. Inflation has been on a steady rise since the September quarter, reportedly fuelled by rising housing construction costs and electricity.
Inflation isn't as under control as the RBA believe, still plenty of families are feeling pressure on increased cost of living. There is also too much heat in the property market which will lead to higher inflation via increased rents etc.
December quarter inflation confirmed thatunderlying inflation was stronger than the RBA was forecasting back in November when it last met. The RBA will ned to humbly admit its third rate cut was a little premature and raise the cash rate by 0.25%. Interestingly, many lenders have already raised their rates in anticipation of this move
Core inflation in December 2025 increased marginally by 0.1% to 3.3% as expected, but is likely to fall into the RBA’s target range through 2026. The recent CPI increases were mainly due to rising housing energy costs, which should begin to ease. The RBA will be concerned about the unexpected stronger labour market outcomes in December 2025 but will wait to see if this is repeated in the next few months.
The February meeting is a very close call, ie 50/50. December inflation came in above target and was higher than expected which may lead to a hike but against this the trend in underlying inflation has been down in the last few months from the July high. On balance we think the RBA should hold and wait for more information as a premature hike could snuff out the recover in consumer spending.
Jobs growth and housing-driven inflation point to a rise which, for many households, will be unwelcome news. Most people will have expected the next rate movement to be up, but they may not have expected it to be so soon.
I think the RBA will take a wait and see approach and keep the cash rate unchanged at this meeting. Inflation has been higher than the RBA would have liked. The latest inflation reading for December showed high inflation owing to some one off factors like the end of electricity rebates. But I think the RBA will need to act sooner rather than later to stem inflationary pressures.
There is an irony at play ATM, that the main driver of inflation is a shortage of housing and higher interest rates will make this shortage worse. The housing shortage is now a macro economic challenge and it can not be fixed with higher rates.
Until I saw the latest quarterly inflation numbers, I thought the case for the RBA to raise rates in February was more "line-ball" than some of the dodgy tennis shots at the Australian Open. Unfortunately, with inflation increasing again, I think it's a case of "Lock it in, Eddie" for an RBA rate rise in February 2026.
Although clear upward pressure on inflation likely to continue and labour market remains resilient RBA likely to remain on the sidelines over the shorter-term
The latest data from the ABS suggests that borrowers should brace for a rate hike at the RBA’s first meeting of 2026. Labour Force data showed the labour market remains tight, with the unemployment rate falling to 4.1% in December 2025. And the December quarter Consumer Price Index revealed that inflation moved further away from the RBA’s target range of 2-3%, rising 3.8% annually.
inflationary pressure, a decent labour market are likely to force a rate hike in Feb, and then a pause before another, most likely in May.
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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.
Calculate how much a cash rate cut will impact your home loan repayments
Enter your loan amount, current interest rate and the latest cash rate change to quickly estimate how much your monthly repayments will change, and what your new repayment will be.
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
Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards 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 started his career in education and textbook publishing in South Korea. He 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 Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University.
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At this stage it’s impossible to say. The outlook for the moment is for rates to either fall slightly further or stay where they are, over the next 6-12 months.
Beyond that we just don’t know. For rates to start rising we’d need to see a big increase in inflation at least.
CuteyJune 16, 2022
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.
A rate cut appears imminent, and not just one, according to a new poll from Finder.
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when will rates increase
Hi Mark,
At this stage it’s impossible to say. The outlook for the moment is for rates to either fall slightly further or stay where they are, over the next 6-12 months.
Beyond that we just don’t know. For rates to start rising we’d need to see a big increase in inflation at least.
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