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.
The RBA is still caught between rising inflation and supply side forces outside their control. However, it would be prudent to raise again given elevated inflation.
High inflation, high government spending and low unemployment will combine to require the RBA to lift rates again. The current fuel crisis is simply adding fuel to the flame already set by the federal government
The March quarter CPI rose to 4.6%, leaving policymakers and households uneasy and frustrated. The ongoing geopolitical tensions in the Strait of Hormuz are not helping either. The resulting uncertainty surrounding energy prices is likely to put further upward pressure on actual inflation and inflation expectations. On the other hand, Australia’s labour market remains notably tight, with unemployment at low levels (4.3%) and underemployment (5.9%) stable, while consumer spending appears marginally strong despite higher borrowing costs. These dynamics suggest that inflationary pressures may remain persistent. Given this outlook, the RBA may again feel compelled to raise the cash rate further to prevent inflation from becoming entrenched. Sustained increases in expected inflation can reinforce actual price pressures, making it significantly more challenging to restore price stability.
Inflation is too high even excluding the effects of the Middle East war. The war has pushed up inflation expectations so the RBA should raise rates to bring down actual inflation and keep expectations in check. If the war weighs on demand, then rates can be cut in future months.
Although headline inflation rose sharply in March, 'underlying' inflation was unchanged from February at 3.3%. Yes, that's still above the top end of the RBA's inflation target band - but no more than it was a month ago. And the increase in fuel prices has a similar impact on aggregate household finances to a further increase in interest rates. So if 'underlying' inflation hasn't risen further, the RBA doesn't need to raise rates again in May (since it's already raised them twice this year). It can afford to "wait and see" what happens to inflation expectations.
Everybody thinks so! My forecasting system, with nearly 200 predictive models, provides an 82 per cent chance of RAISE! This probability is in line with those provided by Australian analytical departments and expresses the market expectations. The most recent readings of inflation above the target likewise suggest the same. Therefore, despite the predictive interval including the current cash rate value, I say it’s a likely RAISE. However, the circumstances are complex, and the RBA’s decision will have to balance them all, making its course of action highly uncertain. My forecasts are available at: https://forecasting-cash-rate.github.io/
Today’s CPI showed annual inflation at 4.6%, well above the RBA’s 2–3% target. Underlying inflation also remains elevated, suggesting price pressures are not just a temporary fuel-price spike. This makes a rate increase next week more likely, as the RBA will want to keep inflation expectations anchored.
I think the RBA will most likely raise the cash rate, although it's not a certainty. The case for a rate hike is that inflation is above target and is likely to move higher in the coming months as the economic impact of the Middle East conflict plays out in Australia and around the world. The RBA may also be concerned about the prospect of inflation expectations drifting further upwards, and may view a rate hike in May as an important signal of its commitment to managing inflation. The case for holding the cash rate constant is that most of the upside risk to inflation is coming from supply disruptions rather than domestic conditions. In addition, the effects of the previous rate hikes have not been fully felt yet (interest rate hikes work to cool the economy gradually, with a lag) and the economy is likely to soften in any case as households and firms respond to the impacts of the energy shock.
The RBA is likely to raise rates at its next meeting, with inflation moving higher again. The recent spike has been driven by higher fuel prices, but inflation was already a concern before this. The economy is still holding up, with employment remaining relatively strong. Higher rates will impact borrowing capacity, and property prices will continue to moderate due to higher rates and uncertainty, although low listings and limited supply will continue to place a floor under prices.
This meeting will be a close call. But the fact that underlying measures of inflation did not go up too much in the March report and developments in the Middle East, including UAE leaving OPEC, may well lead the RBA to hold at this meeting as a way of moderating the pace of rate increases given the conflicting tensions of a supply shock on inflation and the real side of the economy. Prior to the inflation report, I thought the RBA would increase, in part in anticipation of an expansionary federal budget. But I suspect they will hold, with a statement that this is a matter of pace in terms of increasing the cash rate given inflationary pressures and that, if inflation measures, including underlying, come in higher than expected in future reports, the oil price shock looks more persistent, and other considerations such as domestic demand pressures following the budget look inflationary, then they may well increase further in future meetings to ensure their forecast has inflation returning to target soon after the oil price shock has dissipated.
Inflation has increased materially as higher energy costs have manifested in higher input costs for businesses. While this supply side inflation will not be addressed by higher rates, previous experience indicates that the RBA will increase the cash rate due to the underlying and headline inflation being outside the band.
I think it is the only practical option. To me, it would be economic madness to raise rates in this time of uncertainty - And even though a recession is forecast, it's not happening yet, if it does So they won't be dropping them
I still expect another two RBA hikes in this tightening cycle and acknowledge that the market curve implies more than a 2 in 3 probability of a May hike, but I'd prefer to see a less aggressive approach especially with Consumer Confidence falling to a record low.
I believe we've only begun to feel the inflationary effects of the rise in oil and petrol prices. With headline inflation already above the target band of 2-3% in February, I would expect it to rise even more in March; forcing the RBA board to raise the cash rate once again.
Inflation will be running hot, employment stubbornly low and consumer expectation now to see another rate rise, giving them clear authority to do what they need to get on top of everything.
The latest CPI figures don’t really justify an urgent rate hike, with inflation at 4.6% and coming in below expectations. However, the 0.9% monthly jump, driven largely by fuel costs, will concern the RBA because of the risk these short-term shocks feed into broader inflation expectations, which is what they are ultimately trying to control. While there’s a strong argument they should hold rates steady, given policy is already restrictive and much of this inflation is supply-driven, the RBA is still managing its credibility after previously underestimating inflation. That means they’re likely to err on the side of being seen as tough, even if another rate rise does little to address the underlying causes of current price pressures. The risk, though, is that they overcorrect just as the economy is slowing, increasing pressure on households and potentially worsening structural issues like rental inflation without meaningfully reducing the real drivers of inflation.
With core inflation stuck above the RBA’s target band, the cash rate was lifted to 4.1% in March. Since then, higher energy prices from reduced Gulf supply have raised near-term inflation risks and lifted business inflation expectations (BOSS: 3.3% in February to 4.2% in April). But firms report little intention to raise their own prices, implying limited pass-through. The RBA is therefore likely to hold in early May, while warning it will respond if second-round effects emerge. Ongoing geopolitical uncertainty also skews risks towards weaker growth and perhaps a recession from mid‑2026, If realized, this would require easier monetary policy.
Inflation rose again in March with underlying inflation remaining at 3.3%yoy or 3.5%yoy using the quarterly measure. This is well above target even before the second round impact of higher oil prices (to things like airfares, fertiliser, plastics and transport costs) impacts. And there is a rising risk that inflation expectations are rising again impacting wage claims. So the RBA is likely to hike again to improve its confidence that inflation will fall back to target on a reasonable timeframe.
While the latest inflation data translates to a good chance of another rate rise, it is clear that the major culprit is fuel. People are already experiencing pain relative to higher rates each time they fill up their car, so the RBA should think twice before adding to this pain, especially just before the Budget.
Inflation has been higher than expected for longer than expected. Higher interest rates lead to lower inflation. There is likely to be sustained pressure on inflation in the months ahead due to higher oil prices. I think the RBA will want to signal that it wants to keep inflation expectations anchored. They do this my increasing interest rates.
Unfortunately, despite the weaker than expected March CPI data, inflation won't be coming down fast enough for the RBA board members in their ivory tower. Unfortunately, pushing the cash rate up to 4.35% will probably have devastating consequences for a lot of Aussies already facing a cost of living crisis and high oil prices.
March inflation spike and continued uncertainty over near-term fuel costs should activate the Bank to raise rates back to where they were at the beginning of 2025
“Governor Bullock has been clear that the RBA Board will take a data-informed approach to keeping inflation within its target range of 2-3%. "Unfortunately for borrowers, the data is pointing to a hike. The ABS’s CPI inflation data showed that inflation climbed over the March quarter, which I expect will force the Reserve Bank to deliver its third rate hike this year.”
I don't think they have much choice, given inflation is still rising. That said, I don't really agree with it, given that government spending is really responsible for the inflation numbers we are getting.
Inflation has lifted to 4.6%, with core at 3.3%, and, as expected, the main driver is higher oil prices. The oil shock and the Middle East conflict were already factored into the RBA's previous decision, so this time the RBA may prefer a wait and see approach as more data come in, especially with business and consumer confidence looking weak. That said, the steady unemployment rate gives the RBA room to hike again given the concerns that the fuel price shock will spill over into broader inflation.
Inflation has spiked again at 4.6% due to numerous factors including - massive overspending by Government - oil price shock due to Iran war - price increase filtering through to every sector of the economy - the RBA's determination to quell inflation and get it back in the target 2% to 3% range
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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