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.

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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.

On 06 June 2023 the RBA increased the official cash rate to:

4.10%

The RBA's next interest rate decision is on:

04 July 2023

Of the experts surveyed by Finder for May:

44% correctly predicted a rate rise

The latest cash rate analysis from the experts

Every month, Finder 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.

May
HOLD
June
HOLD
Lower inflation and weaker economic growth

May
RAISE
June
RAISE
RBA have clearly stated the fight against inflation continues as itb remains stubbornly high.

May
HOLD
June
RAISE
We are way behind in the fight against inflation. And our spread with the US is lowering the AUD and further fueling inflation.

May
RAISE
June
RAISE
RBA is bound to increase the cash rate as all key economic indicators show signs towards tightening monetary policy. The inflation figure increased to 6.8% due to rising fuel prices, new dwellings and other essential items such as food and beverages, thus putting upward pressure on households living cost index. Employment figures are pretty robust, with the unemployment rate hovering around 3.6% while the labour market participation rate remains at 66.7%

May
RAISE
June
RAISE
The fact that headline monthly CPI returned back up to a year-ended 6.8% for April provides clear cover for the RBA to raise the policy rate to demonstrate a further response to inflationary pressures. The monthly measure is somewhat volatile and is not completely comparable across each month of a quarter. So it is possible that the May reading will drop back down. The drop to 6.5% when excluding volatile items also provides some hope that future inflation releases will suggest a further easing of inflation and allow the RBA to hold in future meetings. Then I think the RBA may have to start decreasing rates by the end of the year if domestic demand deteriorates and the unemployment rate starts going up more rapidly. This is far from certain and a softer landing may still be possible. But it is a possibility.

May
HOLD
June
RAISE
The RBA is in the unenvious position of steering the economy away from its inflationary curse, and more needs to be done. Consecutive rate rises are needed, rather than its regrettable stop start course it had earlier this year.

May
RAISE
June
RAISE
Based on the new data from May, all my forecast systems are aligned and indicate a 15 basis point rise in the cash rate, with further increases expected throughout the year. The forecast intervals have also been narrowed to 3.9 to 4.1%, leaving little doubt about the projected raises. All this seems to be in line with the slowly falling inflation rate, which reached 6.8% in April. My forecasting system for this month includes thirty-two bond yield models for weekly and monthly data and sixty-four complex dynamics time-varying risk models encompassing the leverage effect and risk premium. The forecasts from individual models are further pooled based on their cash rate forecasting capacity.

May
RAISE
June
HOLD
Line ball decision - early signs of an easing in economic activity may encourage another pause - but inflation remains relatively untamed

May
RAISE
June
HOLD
It's line ball this week, but the Bank may want to raise rates before the budget so as not to be seen to raise them after the budget

May
HOLD
June
HOLD
Consumer confidence is in the doldrums and retail sales volumes are going backwards. That backdrop, combined with the falling core inflation figures, demonstrates that the Reserve Bank of Australia has done enough to temper demand. It is now a waiting game to see that flow through to inflation. We expect the RBA to keep rates steady in May and beyond. Rate cuts are on the cards from early next year. If the RBA presses on with rate hikes regardless, households could suffer more than necessary. For many, it would feel like an economic recession, even if population growth keeps aggregate GDP expanding.

May
HOLD
June
HOLD
We think the RBA has already done enough with a high risk of recession which will knock inflation a lot lower. But the RBA’s strong hawkish bias combined with still high inflation and upside risks to wages growth flowing from the Minimum Wage Case, high public sector pay and the tight labour market the likelihood is that it will raise rates further. We are now allowing for another hike in July but the risk is high that it could come this month.

May
RAISE
June
HOLD
I believe the Reserve Bank will hold the cash rate in June. The ABS’s Monthly CPI indicator rose 6.8% in the year to April 2023, but is still below the peak we saw in December 2022, which should hopefully give the RBA and borrowers some breathing room.

May
HOLD
June
RAISE
Inflation, especially the trimmed mean of the CPI, remains significantly above the RBA's target band. The RBA is still in catch-up mode with respect to matching their cash rate settings to the inflation reality. The RBA currently seems particularly concerned about services inflation and potential wage increases unaccompanied by productivity gains.

May
RAISE
June
RAISE
Inflation is stubbornly high and it is not forecast to return to the target range for a long time yet. The RBA may feel obliged to raise the cash rate further to ensure that inflation expectations remain anchored.

May
HOLD
June
RAISE
Although inflation has moderated, it still remains at levels well above that seen prior to the COVID-19 pandemic. Of particular concern, is services inflation which continues to be strong. Since labour is the main component of services, this points to higher labour costs. This would be concerning to the RBA.

May
HOLD
June
RAISE
Although the monthly CPI for April was higher than expected, after May's 25 basis point increase in th cash rate, monetary policy now seems sufficiently tight to provide reasonable grounds for thinking that it will decline to the target range

May
RAISE
June
HOLD
After last month’s rise we believe leaving rates unchanged at the June meeting is the prudent course. Removing the fuel excise anomaly, the most recent CPI data for April shows a continuation of the easing in inflation and as rental inflation remains a major concern, a further increase will hurt some sectors of the market more than others.

May
HOLD
June
HOLD
The RBA has indicated in the past that it will pause and evaluate its further steps.

May
HOLD
June
RAISE
It is clear from today's CPI data that inflation is still far away from RBA's 2-3% target. There is no doubt that RBA will increase the cash rate for the next two meetings, each time 25 bps.

May
RAISE
June
HOLD
Inflation remains well above RBA's target. A rate cut in mid 2024 is probable, but risk of embedded inflation now exists.

May
RAISE
June
RAISE
It is likely that inflation is not moving down fast enough with projected wage rises and other costs proving inflationary

May
RAISE
June
RAISE
The latest monthly CPI data indicates that inflation remains sticky, leaving the RBA with little choice but to raise the cash rate. Rapidly rising housing rents is one key driver of persistently high inflation levels and with a limited supply of new properties in the construction pipeline and rising population growth, it is anticipated to continue impacting the CPI for some time to come.

May
HOLD
June
HOLD
inflation remains significant and the labour market tight so while the RBA may 'pause' there is a tightening bias.

May
HOLD
June
HOLD
The RBA board is likely to keep rates on hold at 3.85% in the June meeting with another pause to assess conditions, although will maintain a tightening bias for some time. The latest monthly inflation data risks another hike to 4.1%, but this is more likely to occur around August (after the next quarterly CPI data).

May
HOLD
June
HOLD
Inflation is proving (and will prove) too "sticky".

May
RAISE
June
RAISE
With services annual inflation recording the largest annual rise since 2001, it's hard to see the RBA not taking measures to curb it.

May
RAISE
June
RAISE
CPI increase persistently high

May
RAISE
June
HOLD
I think from here rate changes will largely be determined by quarterly CPI. Over the month the labour market eased, retail trade slowed too, not much to suggest a need to tighten rates again this month.

May
HOLD
June
HOLD
Rba needs more flexibility re the inflation outlook. Getting inflation back to 3% by mid 2025 is too long They need to lower the risk that that target may slip

May
RAISE
June
RAISE
The RBA is receiving mixed messages about how quickly inflation is coming under control and is likely to take a breather this month

May
HOLD
June
RAISE
Having raised the cash rate last month, and with the high inflation rate only slowly decreasing, the RBA is likely to increase the cash rate in June

May
HOLD
June
RAISE
It's a guess. Hard to disentangle conflicting views and data at the moment. I thought the rate had peaked with the pause, but that proved to be wrong.

May
HOLD
June
HOLD
RBA will hold to gather more information before acting further.

May
RAISE
June
RAISE
The RBA tends to overshoot as getting the right balance is not that easy. Whilst the economy has slowed somewhat, it may not be enough and so I think the RBA will increase the rates by another 25 basis points.

May
RAISE
June
RAISE
The RBA is in a dilemma. As Michael Chaney of Wesfarmers just pointed inflation is ingrained for at least two years and nothing much the RBA can do will make much difference to it. Therefore, I think the bank will hold – I sure hope they do. There has been too much pain inflicted on mortgage holders already.

May
HOLD
June
HOLD
Further increases required to curb inflation which is clearly their objective above all other considerations

May
HOLD
June
RAISE
Inflation is still well above target

May
RAISE
June
HOLD
Credit is probably tight enough now to bring down inflation, although there is some chance of one or two further rises. Rates on track to come down next year

May
HOLD
June
HOLD
The economy is slowing already with much more contraction yet to come through from previous cash rate increases. It's time to pause.

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 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 below shows the lowest home loan rates in Finder's database each month. These rates fall or rise broadly in line with changes to the official cash rate.

How does the RBA's cash rate decisions affect your finances?

The RBA can do 3 things with the cash rate: lift it, lower it or hold it at the current level.

Raise

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.

Banks may also increase interest rates on term deposits and high interest savings accounts. But in practice home loan rates rise faster than savings account rates.

Down

If the RBA lowers the cash rate

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.

Hold

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

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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 $450,000 home loan with a variable interest rate of 5.00%. It's a 30-year loan term with principal-and-interest repayments.

Your monthly repayments are $2,416.

⬆️ If the cash rate rises by 25 basis points your interest rate would increase to 5.25%. Your monthly repayments would now be $2,485. This would cost you an extra $69 a month or $828 a year.

⬇️ If the cash rate decreases by 25 basis points your interest rate would fall to 4.75%. Your monthly repayments would now be $2,348. This would save you $68 a month or $816 a year.

More questions about the RBA cash rate

Check out more RBA news and Finder's RBA survey press releases

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48 Responses

    Default Gravatar
    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.

      Avatarfinder Customer Care
      RichardJune 18, 2022Staff

      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

    Default Gravatar
    octoJune 18, 2018

    how long can AUD interest rate remain Low…..?

    how soon will the AUD follow the US FED Rate Hike…….?

    thank you

      Default Gravatar
      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

    Default Gravatar
    TaneeshaMay 24, 2018

    Do you think the cash rate will stay the same at the June RBA meeting?

      Avatarfinder Customer Care
      JoshuaMay 24, 2018Staff

      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

    Default Gravatar
    BrookMay 5, 2018

    What do you think that how the international economic condition influence the cash rate?

      Avatarfinder Customer Care
      JeniMay 6, 2018Staff

      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

    Default Gravatar
    RobJune 11, 2017

    What do you think will be the next move for RBA on cash rate and when?

    Thank you!

      Default Gravatar
      JonathanJune 11, 2017

      Hi Rob!

      Thanks for the comment.

      As of the moment, most of resident rate experts predict that rates will be the same. The cash rate target is released on the first Tuesday of every month except January.

      You can follow the updated RBA forecast through our website.

      Hope this helps.

      Cheers,
      Jonathan

      Default Gravatar
      RobJune 11, 2017

      Thanks Jonathan, I meant in the longer term, 6-12 months.

      Default Gravatar
      JonathanJune 11, 2017

      Hi Rob!

      We appreciate your follow-up.

      Currently, there are multiple factors that need to be considered and due to the volatility of these factors, it is a bit hard to conclude whether they’ll leave the rates unchanged for the next few months or not.

      If you have further inquiries, you may contact:

      Media and Communications
      Secretary’s Department
      Reserve Bank of Australia
      SYDNEY
      Phone: +61 2 9551 9720
      Fax: +61 2 9551 8033
      Email: rbainfo@rba.gov.au

      Hope this helps.

      Cheers,
      Jonathan

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