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RBA cash rate
Are rates going up or down? What will the next RBA interest rate decision be? Get the latest cash rate predictions and insights from 40+ experts.
The Reserve Bank of Australia sets the official cash rate target. This is a benchmark rate that has a big impact on home loan interest rates, savings accounts and other credit products.
The official cash rate is currently:
4.35%
The RBA's next interest rate decision is on:
24 September 2024
Of the experts surveyed by Finder for August :
81% correctly predicted the cash rate would hold.
Graham Cooke - Head of consumer research
Australia's core inflation rate, which excludes the most volatile products such as food and energy, has slowed enough to almost rule out another rate rise.
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.
Our inflation is embedded, but there is so much hurt going on but I don't think the Reserve. Bank will be raising rates for a while. Both state and federal governments are on spending sprees
I expect the Reserve Bank will keep the cash rate on hold in August. The ABS June quarter Consumer Price Index revealed annual trimmed inflation has trended down for the sixth quarter in a row, indicating that the current cash rate is having the desired impact.
Its clear that inflation is largely heading in the direction the RBA is forecasting after the latest CPI data was published. There seems no reason for the RBA to lift or reduce interest rates at this stage.
Although there is a slow down happening in the economy, the cycle is slower than many expect, and there is usually a late stage surprise surge. So any decline in rates must wait for this process to play out.
The latest CPI data confirms that core inflation is still moderating but at a frustratingly slow pace, meaning the RBA will maintain the cash rate at its current restrictive level for the balance of 2024. We still expect cuts next year, most likely starting in May.
There is a slowdown in inflation and economic activity, and unemployment is creeping up. Although inflation remains persistently above the target, the RBA is likely to hold the cash rate.
The July data on inflation came in at or below expectations. So the Bank will probably hold rather than hike. According to legend, Napoleon wanted his generals to be lucky rather than skilful. Michele Bullock could be Jim Chalmers’ lucky general.
The RBA will raise the cash rate because it will want to demonstrate its primary focus is on bringing inflation back down to the target range. The reversal of year-ended inflation back up to 3.8% from 3.6% in Q1 means that it makes sense for the RBA to raise the cash rate by 25 basis points. While headline inflation is expected to fall again in Q3, the persistence of underlying measures above the target range and an increase in services inflation motivate a tightening to keep the RBA's medium term forecasts consistent with inflation falling back to the target range as originally planned. However, I think that a further weakening of economic conditions and improvements in inflation measures for Q3 will allow the RBA to consider reversing the rate rise in December and continue cutting in the new year to bring the cash rate back towards a neutral level.
Economic growth remains weak. It will take more time for inflation to finally reach the RBA’s target range. There is no need for a change in the cash rate now. By November, I expect the RBA to be ready to cut.
Inflation is tracking only slightly above the RBA's latest projections, suggesting the central bank has more time to assess whether current policy settings are appropriate to get inflation back within the target band.
Inflation remains above the RBA's target band despite moderating in recent months. House prices appear to have significantly decoupled from incomes and shrugged off the rate increases to date. As long as low unemployment (effectively full employment) persists, the cash rate is unlikely to be reduced and further increases remain a possibility.
Signs of softening employment markets and inflation falling significantly from it’s peak of 7.8% in December 2022, should see the RBA hold rates steady for the remainder of the year.
Inflation has lifted to 3.8 per cent in the year to June, from 3.6 per cent in March, beinng the first increase in 18 months. While this is a concern, a more positive sign is that the RBA’s preferred measure of underlying inflation - which removes more volatile price movements - dropped to 3.9 in the year to June, from 4 per cent in March. The RBA is likely to keep interest rates on hold this meeting and wait for further data as headline inflation is likely to drop sharply over the second half of this year as billions of dollars in state and federal government electricity rebates lower power bills.
The latest release of data shows that inflation remains higher than target. I think the RBA will want to increase interest rates to try and bring down inflation rather than risk not doing anything and seeing inflation rise in the future.
Inflation is stubborn, and there are hints that the RBA is alert to the risk of inflation expectations de-anchoring, and the future cost that would entail to fight a change in expectations.
The June quarter numbers showed an uptick in 'headline' inflation and a marginal decline in 'underlying' inflation .. the latter was marginally, rather than 'materially', above the RBA's forecast, so although there's a legitimate case for raising rates, I don't think it's strong enough to prompt them to overturn the choice they have previously made to 'tolerate' inflation being above their target for longer than their peers, in order to minimize the impact of the struggle to contain inflation on unemployment and under-employment.
The Q2 CPI print provided enough evidence that inflation is still on a path to the RBA's target for them to keep rates on hold. Headline inflation is in line with the RBA's forecasts. Beyond this, tradables surprised to the upside, but this strength will likely be transitory. Encouragingly, non-tradable categories outside of housing saw an easing in inflation pressures - showing that tight policy is working to rein in demand.
Inflation rose in the June quarter but it was in line with RBA’s own forecasts heading off the need for another rate hike. At the same time inflation is still too high and the RBA still lacks confidence that it will sustainably head back to target so its too early to expect a cut.
Australia's annual inflation rate has risen to 3.8%, up from 3.6% earlier this year. The ABS reported a 1% price increase in both the June and March quarters. This marks the first rise in annual CPI inflation since December 2022. It's likely the RBA will raise interest rates at their August 6 meeting to address these inflationary pressures.
Inflation is likely to decline in a grudging fashion. Inflation seems "stickier" in Australia than elsewhere probably reflecting the RBA's cautious approach (compared to perrs) in raising the policy rate.
We are at a crossroads! Given that the pooled forecast from my system indicates a 70 per cent chance of a RAISE, there has never been such a discrepancy in the forecasts from particular models. Bond yield curve models reflecting market expectations indicate a RAISE by 10 bp. Global interest rate models follow other markets and indicate a CUT. Univariate models reflecting persistence settle at HOLD. It's true to write that the RBA should increase the cash rate, but they will probably not. You can access these forecasts at https://forecasting-cash-rate.github.io/
Leaving rates unchanged is the right move. Inflation is heading in the right direction, albeit gradually, and many mortgage holders are already on the brink.
Inflation remains sticky and well above target. Large fiscal stimulus impacting now will only intensify underlying inflationary pressures
What is the official cash rate?
One of the Reserve Bank's primary roles is setting monetary policy for the Australian economy. This involves setting the cash rate (or to use its full name, the official cash rate target).
At a technical level, the cash rate is actually the interest rate banks pay for borrowing money from each other overnight. Banks use this to manage liquidity and issue funds as needed.
Australian banks can borrow and deposit money with the RBA at just below the current cash rate target.
How the official cash rate target affects interest rates
But for the average Australian consumer, the cash rate is really useful as a broad benchmark for the interest rates on home loans and savings accounts. A high cash rate makes borrowing money more expensive and sees home loan repayments rise.
A low cash rate makes it cheaper to borrow money. This boosts borrowing and spending.
How has the cash rate changed over time?
The Reserve Bank adjusts the official cash rate target over time in response to various economic data, including:
Inflation
The unemployment rate
Global economic factors
The cash rate stayed at the then record low of 1.50% from 2016 to 2019, when the RBA lowered it further in response to low inflation and slightly higher unemployment.
Then as the Covid-19 pandemic began to hurt the Australian economy the RBA dropped the cash rate even further. This was to make borrowing cheaper and stimulate a struggling economy. The cash rate hit the record low of 0.10% during this time.
Now, with inflation soaring the RBA has lifted the cash rate very quickly to try to slow demand and curb price rises.
The graph on the left below shows movements in the official cash rate over time. And the graph on the right shows the market's lowest home loan rates. You can see how the market responds by raising or lowering rates broadly in line with the RBA's decisions.
How does the RBA's cash rate decisions affect your finances?
The RBA can do 3 things with the cash rate: Raise, lower or hold the cash rate at its current level.
If the RBA lifts the cash rate
When the cash rate rises, most lenders pass on the rate rise to borrowers on variable rate home loans.
If the cash rate rises by 25 basis points, then most borrowers will see 25 basis points added to their home loan's interest rate.
If you have a fixed rate home loan nothing changes. Your rate is locked in for the duration of the fixed period.
When the RBA lowers the cash rate, most lenders pass on some if not all of the cut to borrowers on variable rate home loans.
Banks also lower rates on savings accounts and other products.
If you have a home loan, it's a good idea to check if your lender has actually passed on the rate cut to you. If it hasn't, you may need to switch.
If the RBA holds the cash rate
A hold decision means the cash rate isn't changing this month. This means that your home loan or savings account rate likely won't change. You don't really have to do anything.
But banks and lenders change interest rates all the time for various reasons even if the RBA doesn't move the cash rate.
Calculate how much a cash rate rise will impact your home loan repayments
Enter your loan amount, current interest rate and the latest cash rate increase to quickly estimate how much your monthly repayments will increase.
Example: how changes to the cash rate can change your loan repayments
You have a $600,000 home loan with a variable interest rate of 6.00%. It's a 30-year loan term with principal-and-interest repayments.
Your monthly repayments are $3,598.
⬆️ If the cash rate rises by 25 basis points your interest rate would increase to 6.25%. Your monthly repayments would now be $3,695. This would cost you an extra $97 a month or $1,164 a year.
⬇️ If the cash rate decreases by 25 basis points your interest rate would fall to 5.75%. Your monthly repayments would now be $3,502. This would save you $96 a month or $1,152 a year.
More questions about the RBA cash rate
Lenders are free to change interest rates on their products whenever they want. The cash rate is a big influence on rates, but there are many other factors. This includes a lender's own funding costs, the amount of deposits the lender has and how competitive it wants to be to attract new customers.
The RBA changes the cash rate target based on a range of factors including inflation, the performance of the Aussie dollar, unemployment, the housing market, and Australia's Gross Domestic Product (GDP).
For example, if inflation rises above the target rate it means that Australians are spending their money too freely and prices are increasing too rapidly. But if the RBA raises interest rates to make it more expensive to borrow money, the economy will settle and price increases will slow down.
Conversely, the RBA will drop interest rates if inflation is too low and the economy is stagnating, encouraging more Australians to spend more money and stimulate economic growth.
The Reserve Bank of Australia is the country's central bank. The RBA's monetary policy has three key objectives which are set out in the Reserve Bank Act 1959:
The stability of the currency of Australia.
The maintenance of full employment in Australia.
The economic prosperity and welfare of the people of Australia.
Setting the official cash rate is one of the bank's key tools to influence monetary policy, inflation and the broader Australian economy. The bank's board meets on the first Tuesday of every month except January to set the cash rate. The RBA will either cut, raise or hold the cash rate.
The RBA's board of governors meets 8 times a year, in February, March, May, June, August, September, November and December. It is here that the board makes a decision on the official cash rate target.
The board used to meet 11 times a year, on every first Tuesday of the month apart from January. It lessened the number of times it meets to provide more time for change between meetings.
However, the RBA can alter the cash rate at any time outside of the meetings. This is rare, but can happen. In March 2020, in response to the onset of the COVID pandemic, the bank cut the cash rate twice. Once at the scheduled meeting and then again mid-month at a special emergency meeting.
Check out more RBA news and Finder's RBA survey press releases
The May cash rate decision was no surprise for most economists, but borrowers waiting for their interest rates to fall may have to wait longer than was expected a couple of months ago.
Mortgage holders are bearing too much of the brunt of the RBA’s effort to bring down inflation, according to the majority of panellists in Finder’s latest poll.
Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio
Richard's expertise
Richard has written 536 Finder guides across topics including:
When do you think the RBA will start raising rates?
JodieSeptember 7, 2016
Hi Julie,
Thank you for contacting finder.com.au we are a financial comparison website and general information service.
It is hard to predict the movement of the cash rate as it is based on a multitude of factors that are continually changing however 7 out of the 38 experts we surveyed in our latest RBA survey for September 2016 said they predict it will start going up in July 2017 or beyond.
Regards
Jodie
EricFebruary 25, 2016
Hi Belinda
Appreciate if you would also send me informations regarding findings of monthly RBA survey.
Regards
Eric
BelindaFebruary 26, 2016
Hi Eric,
Thanks for getting in touch.
On this page, you can view the RBA Cash Rate Target Announcements for each month from February 2015 until February 2016. You can also view the commentary of our resident rate experts in the lead up to each Board meeting which occurs on the first Tuesday of every month (except January).
Please feel free to sign up to receive our detailed RBA cash rate updates by completing the form provided above.
Regards,
Belinda
SyedDecember 8, 2015
Hi,
My new house is ready now and wondering what is the best time to sell, should I put my house in the market now or January or wait for the February. I am not committed any where so I can wait.
Your advise needed.
Thanks
BelindaDecember 9, 2015
Hi Syed,
Thanks for your enquiry.
The best time to sell your property relies on plenty of other factors that you need to consider before selling your house. Our guide to find out when really is the best time of year to sell your house might be handy for you.
hello.
i wonder if i could receive some information regarding not only the latest current economic situation, but also cash rate movements over the year.
BelindaAugust 17, 2015
Hi Dongho,
Thanks for your enquiry.
Above on this page you can view the ‘Reserve Bank monthly announcements’ to read about the cash rate movements and monetary policy decisions that have occurred over the course of this year. You can also sign up to receive our RBA cash rate updates by filling in the form provided above.
In regards to the current economic situation, finder.com.au is an online comparative website and we can’t comment on the activity of the broader Australian economy.
Thanks,
Belinda
OliJuly 17, 2015
Can you please send through the information on the RBA via email?
I’m doing a school Economic assignment on the RBA and financial markets
BelindaJuly 17, 2015
Hi Oli,
Thanks for your enquiry.
I have emailed you with some information regarding the findings from our monthly RBA survey.
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When do you think the RBA will start raising rates?
Hi Julie,
Thank you for contacting finder.com.au we are a financial comparison website and general information service.
It is hard to predict the movement of the cash rate as it is based on a multitude of factors that are continually changing however 7 out of the 38 experts we surveyed in our latest RBA survey for September 2016 said they predict it will start going up in July 2017 or beyond.
Regards
Jodie
Hi Belinda
Appreciate if you would also send me informations regarding findings of monthly RBA survey.
Regards
Eric
Hi Eric,
Thanks for getting in touch.
On this page, you can view the RBA Cash Rate Target Announcements for each month from February 2015 until February 2016. You can also view the commentary of our resident rate experts in the lead up to each Board meeting which occurs on the first Tuesday of every month (except January).
Please feel free to sign up to receive our detailed RBA cash rate updates by completing the form provided above.
Regards,
Belinda
Hi,
My new house is ready now and wondering what is the best time to sell, should I put my house in the market now or January or wait for the February. I am not committed any where so I can wait.
Your advise needed.
Thanks
Hi Syed,
Thanks for your enquiry.
The best time to sell your property relies on plenty of other factors that you need to consider before selling your house. Our guide to find out when really is the best time of year to sell your house might be handy for you.
You can also refer to a guide on everything you need to know before you sell your house on this page. You can also speak to a real estate agent for assistance.
I hope this helps.
All the best,
Belinda
hello.
i wonder if i could receive some information regarding not only the latest current economic situation, but also cash rate movements over the year.
Hi Dongho,
Thanks for your enquiry.
Above on this page you can view the ‘Reserve Bank monthly announcements’ to read about the cash rate movements and monetary policy decisions that have occurred over the course of this year. You can also sign up to receive our RBA cash rate updates by filling in the form provided above.
In regards to the current economic situation, finder.com.au is an online comparative website and we can’t comment on the activity of the broader Australian economy.
Thanks,
Belinda
Can you please send through the information on the RBA via email?
I’m doing a school Economic assignment on the RBA and financial markets
Hi Oli,
Thanks for your enquiry.
I have emailed you with some information regarding the findings from our monthly RBA survey.
You may also sign up for RBA cash rate forecast and updates.
Thanks,
Belinda