RBA Cash Rate

0.25% CASH RATE
0.25%
CASH RATE HOLD

Announced on 06 Oct 2020

We update this page every month as the Reserve Bank of Australia (RBA) meets to make a decision on the official cash rate.

The next RBA decision will be announced...

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What is the official cash rate and who sets it?

On the first Tuesday of the month, at 2:30 PM the RBA Board meets to decide whether to raise the cash rate, lower it or keep it the same. Their decision is influenced by a range of factors including inflation, unemployment, wage growth, the housing market, the Australian Dollar, Australia’s Gross Domestic Product (GDP) and the levels of consumer confidence.

The RBA’s monetary policy aims to achieve three key objectives which are outlined in the Reserve Bank Act 1959:

 

1. The stability of the currency of Australia.

 

2. The maintenance of full employment in Australia.

 

3. The economic prosperity and welfare of the people of Australia.

To achieve these goals, the RBA aims to set an inflation target at 2-3% over the medium term, hoping to increase the Consumer Price Index (average price on common goods and services) between 2-3% each year.

The Bank can control inflation by making adjustments to the official cash rate.

 

How has the RBA Cash Rate Changed Over Time

The graph above shows the movement in the official cash rate over the span of 12 months. A lower cash rate reduces the cost of borrowing money, encouraging more people to borrow – potentially boosting the economy. Higher interest rates tends to boost consumer spending. This consequently affects the level of inflation through supply and demand of goods and services.

How can an interest rate change affect you?

 

If cash rate increases

If you have a variable rate, your lender can possibly raise your home loan interest rate depending on the bank.

If you have a fixed rate, your home loan rate will remain unchanged for the remainder of your fixed-rate term.

 

If cash rate holds

If you have a variable rate, your lender will probably leave your home loan interest rate unchanged.

If you have a fixed rate, your home loan rate will remain unchanged for the remainder of your fixed-rate term.

 

If cash rate decreases

If you have a variable rate, your lender can possibly lower your home loan interest rate.

If you have a fixed rate, your home loan rate will remain unchanged for the remainder of your fixed-rate term.

 

If cash rate increases

If you have a savings account, your lender will probably raise your interest rate.

If you have a term deposit, your interest rate will remain unchanged for the remainder of your term.

 

If cash rate holds

If you have a savings account, your lender will probably leave your interest rate unchanged.

If you have a term deposit, your interest rate will remain unchanged for the remainder of your term.

 

If cash rate decreases

If you have a savings account, your lender will probably lower your interest rate.

If you have a term deposit, your interest rate will remain the unchanged for the remainder of your term.

 

If cash rate increases

If you have a variable rate, your lender may increase your personal loan interest rate.

If you have a fixed rate, your personal loan interest rate will remain unchanged for the remainder of your fixed-rate term.

 

If cash rate holds

If you have a variable rate, your lender may leave your personal loan interest rate unchanged.

If you have a fixed rate, your personal loan interest rate will remain unchanged for the remainder of your fixed-rate term.

 

If cash rate decreases

If you have a variable rate, your lender may lower your personal loan interest rate.

If you have a fixed rate, your personal loan interest rate will remain unchanged for the remainder of your fixed-rate term.

Note: Lenders are allowed to act independently of the decisions made by the Reserve Bank of Australia.

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