Are interest 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:
10 December 2024
Of the experts surveyed by Finder for November:
100% correctly predicted the cash rate would hold.
Graham Cooke - Head of consumer research
The good news is that inflation is falling and it's getting close to the RBA's target. But it doesn't look like we'll get a rate cut this side of Christmas. A cut early next year looks more likely.
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.
There is no evidence that Australia is getting inflation under control. With a federal election due in less than six months you can bet they'll be huge spending from the current government between now and election day. On top are promises from both the government and the opposition that they will embark on major building projects to solve the housing crisis. Talk to any builder and they'll tell you there's massive problems with costs and getting skilled labour. I don't see inflation dropping in these conditions.
I believe the Reserve Bank will keep the cash rate on hold in November. ABS data shows that underlying inflation remains higher than desired, and the labour market recorded a strong rise in employment in September, which could put upward pressure on inflation. While the next time rates move, they’re expected to go down, borrowers might have to wait a few more months to see this change.
The quarterly inflation data continued the pleasing trend of moderating inflation in line with our forecast of rate cuts next year, but not sufficient progress with core inflation to change our view that the first cut is most likely in May. It would be helpful if that first cut is 35bp to an even 4 %
Inflation is easing in line with expectations with headline breaking into the upper end of the RBA’s target range in the Sept-24 quarter. However, persistent labour market tightness limits the RBA’s flexibility to ease. Holiday season spending could indicate whether demand is sustainably strong or just temporary, impacting RBA’s rate plans well into 2025.
Higher for longer remains the watchword for the cash rate. September did see falls in both the headline and core inflation rates. However, the core rate is still outside the target band, the labour market is still fairly strong and public spending remains elevated. With a federal election likely in the first half of next year, it's hard to see a spending cut any time soon.
Q3 2024 headline inflation fell to 2.8%, inside the RBA’s target range. Core inflation also fell to reach 3.5%, just above the range. Inflation expectations of consumers and business remain anchored in the range. While these outcomes are consistent with a monetary policy pivot in November, the RBA is likely to remain cautious. There is a growing downside risk of further delay.
Monthly inflation readings since last quarterly CPI announcement have fallen precipitously. Assuming these monthly reductions are reflected in the next quarterly CPI report, then quarterly CPI inflation may well show a return to the RBA's target 2-3% range. The RBA will be keen to inject some confidence in the run-up to the important Christmas trading period. The most effective way to do this, while obtaining maximum confirmation of the downward inflation trend, is to hold in November but signal intention to reduce in December and then follow-through on this signal. Any reductions will be limited by continued upward pressure on house prices and full employment.
Despite headline inflation falling to 2.8%, underlying inflation remains elevated at 3.5%, driven by persistent price pressures in services and housing. A strong jobs market and steady wage growth add further inflationary pressure, making the RBA cautious about easing too soon. Temporary government rebates on energy and lower fuel costs are masking core inflation, making a rate cut unlikely until early 2025. For real estate markets, this means demand is expected to stay steady, listings will continue to grow and this will see price growth moderate further.
Although headline inflation has dropped within the RBA’s target band, the trimmed mean measure is still above 3%. I suspect the RBA will keep the cash rate where it is until the trimmed mean has come down further.
The first RBA rate cut has now been pushed out due to our relatively strong economy strong job creation and low unemployment levels. While a rate cut by the end of 2024 is possible, it's more likely to occur in early 2025, depending heavily on inflation and employment metrics.
The September quarter 'underlying' inflation numbers were in line with the RBA's expectations and not 'good' enough to give it the confidence it needs that underlying inflation is heading 'sustainably' back to its target band to justify cutting rates in either November or December. However the December quarter CPI numbers due in late January should be good enough to allow for a rate cut in February.
Inflation is likely still too high to see the RBA cutting in November. But it is falling and likely to continue to do so resulting in a start to rate cuts in February next year. A December cut is still possible but would need to see a further sharp fall in underlying inflation in October monthly data along with a renewed rise in unemployment.
The September quarter CPI inflation rate fell to 2.8%, the lowest since March 2021, and this marks the first time inflation is within the RBA’s target range of 2-3%. However, it’s premature to consider a rate cut at this stage, particularly with the RBA board not meeting in January.
We're not moving anywhere! ...for now! The forecasts from all my models indicate a decisive HOLD for November. They also indicate a slight downward pressure for the coming months. I interpret these predictions as a clear expectation of cuts in the cash rate but at an uncertain horizon. Forecasting the breakpoint is always tricky, and the upcoming data announcements will play a decisive role in shaping the forecasted trajectories in the following months. You can access these forecasts at https://forecasting-cash-rate.github.io/
While many consumers will be hoping for a rate cut prior to Christmas it appears the RBA is set on waiting for a consistent downward trend in inflation to materialise. The signs are there though, so a rate reduction is warranted in the near term.
The latest fall in inflation will be good news but the RBA will wait longer to see that falls in inflation are entrenched. A weakening economy will see rate cuts sooner, but more likely first half of next year will see first rate cut.
While inflation is trending down, its still higher than where it needs to be. I think the RBA will want to wait to see if it falls further in the fourth quarter
The RBA will look through the temporary fall in headline CPI due to energy rebates and will want to see progress on underlying inflation. If that progress happens for Q3 and labour market indicators start surprising on the downside, they could start cutting in December. But I expect the first cut will be February. I also think there will only be about three cuts in 2025 unless conditions deteriorate rapidly. The more likely scenario is a weak, but growing economy for which the RBA will want to test what the neutral level of interests rates is before cutting too far below somewhere in the 3.35-3.84% range.
Whilst inflaltion is getting under control we are not really seeing it reducing as fast as the RBA would like. On top of this is tat the RBA is always a little slow when it comes to reducing rates, so a cut in the short term is unlikley.
The good news is that latest CPI number is within the RBA's band. Moreover, this decline was expected by the market. However since other measures of CPI that exclude the more volatile items are still outside the band, RBA may wait before lowering rates.
We’re trending in the right direction as CPI inflation eases to 2.8%, marking a return to the RBA’s target range of 2%-3%. However, underlying inflation remains at 3.5% so the decision to hold still remains likely.
Inflation will be increasingly sticky given embeded factors: excise indexation, rapid populaiton growth leading to house price and rental price growth, labour shortages.
I have been bearish on the direction of interest rates for quite some time now because (as I have been consistently saying) Federal Government spending is effectively pushing/keeping up the price of goods and services in this country. This view has now been independently vindicated by the IMF which recently published its forecast for Australia's headline inflation rate over the next year or so - and its not a pretty read. The IMF is forecasting inflation to stay above 3% throughout 2025, and hit a peak of 3.6% Further, its forecast indicates Australia will have the second highest inflation rate among the world's advanced economies. For this reason I cannot see interest rates in Australia falling any time soon and there is the real possibility we won't see downward movement until 2026.
Inflation seems to be more in line with the target band however there is still stress in housing costs as well as food at the supermarket. By cutting too early the RBA potentially lights a match for the property market with renewed confidence which in turn could lead to further inflation in that sector. I also believe that cutting pre-Christmas would be an invitation for people to spend as the first cut will be a psychological barrier that is removed for a lot of households. We are certainly seeing more confidence amongst our client base.
We've just received Sep 24 quarter inflation data and although headline inflation is back in the target range largely due to temporary cost-of-living relief, underlying inflation at +0.8% for the quarter is still growing too fast to reach the 2% to 3% target range. Underlying inflation also hasn't printed below +0.8% since Jun 21 so I can't see a situation whereby this print materially changes the outlook for interest rates.
Headline inflation will fall sharply in the Q3 print, but the RBA's focus will be on the trimmed mean measure. Unit labour cost growth is still too high for them to start cutting rates.
With the Q3 CPI showing trimmed mean inflation in line with what we infer to have been the RBA’s forecast, we expect another shift towards a neutral stance at the meeting. The longer the data continue to print in line with the RBA’s expectations, the more likely a rate cut becomes, given the trajectory of the RBA’s own inflation forecasts. The extent to which the Board moves to neutral (or further) at today’s meeting will provide a guide to how forward-looking policy may be over the next stage of the cycle. We don’t expect the Board to explicitly consider an increase in the cash rate, nor do we expect it to explicitly consider a reduction just yet, although that point is approaching.
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
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 553 Finder guides across topics including:
Hi,
What would be the cash rate for May and what are the main reasons for that forecast?
Thank you
Kind Regards
Finder
MarcApril 23, 2015Finder
Hi Mala,
thanks for the question.
Our expert forecasts will be released late next week so please check back then for Australia’s top expert forecasts on the May RBA cash rate.
Cheers,
Marc.
ChristiandApril 2, 2015
Just wondering if there are any records available to the public that show the history of financial institutions passing on RBA rate cuts and increases.
Black and white; RBA cut by X, Bank A cut by Y, Bank B did not change, etc.
Finder
ShirleyApril 7, 2015Finder
Hi Christiand,
Thanks for your question.
While there are no public records with that information, you may find our guide to historical home loan rates versus the official cash rate useful for your reference.
Cheers,
Shirley
JacjacjacquieMarch 11, 2015
I have a client asking how many rate cuts (and what %) have been handed down since Oct 2013?
Finder
ShirleyMarch 11, 2015Finder
Hi Jacjacjacquie,
Thanks for your question.
We have a page on historical home loan interest rates that may be able to help. The page contains rates back to 2011 alongside the official cash rate.
Cheers,
Shirley
EuanFebruary 11, 2015
Hello – has Macquarie Bank passed on the interest rate cut – could not see them listed in the table. Thanks
Finder
ShirleyFebruary 11, 2015Finder
Hi Euan,
Thanks for your question.
At this current point in time Macquarie Bank haven’t passed on the rate cut. As soon as we receive an update we will be updating the table above. Stay tuned!
Cheers,
Shirley
How likely would you be to recommend Finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
Finder makes money from featured partners, but editorial opinions are our own.
Finder is one of Australia's leading comparison websites. We are committed to our readers and stand by our editorial principles
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
what time is the decision made
Hi Phil,
Thanks for your question.
The decision is announced at 2:30pm.
Thanks,
Elizabeth
Hi,
What would be the cash rate for May and what are the main reasons for that forecast?
Thank you
Kind Regards
Hi Mala,
thanks for the question.
Our expert forecasts will be released late next week so please check back then for Australia’s top expert forecasts on the May RBA cash rate.
Cheers,
Marc.
Just wondering if there are any records available to the public that show the history of financial institutions passing on RBA rate cuts and increases.
Black and white; RBA cut by X, Bank A cut by Y, Bank B did not change, etc.
Hi Christiand,
Thanks for your question.
While there are no public records with that information, you may find our guide to historical home loan rates versus the official cash rate useful for your reference.
Cheers,
Shirley
I have a client asking how many rate cuts (and what %) have been handed down since Oct 2013?
Hi Jacjacjacquie,
Thanks for your question.
We have a page on historical home loan interest rates that may be able to help. The page contains rates back to 2011 alongside the official cash rate.
Cheers,
Shirley
Hello – has Macquarie Bank passed on the interest rate cut – could not see them listed in the table. Thanks
Hi Euan,
Thanks for your question.
At this current point in time Macquarie Bank haven’t passed on the rate cut. As soon as we receive an update we will be updating the table above. Stay tuned!
Cheers,
Shirley