What this measures
The cash rate is the interest rate the Reserve Bank of Australia targets for overnight loans between banks. It’s the RBA’s main policy lever and flows through to mortgage and savings rates.
How to read this figure
This figure is a different kind of thing from the statistics beside it: a decision rather than a measurement. The target is set by the Monetary Policy Board and announced on the day, while the rate actually traded is a market price on overnight loans between financial institutions, steered toward the target rather than set by it.
What holds the two together is a corridor of administered prices, and knowing its shape explains why the traded rate stays put. Under the ample reserves system the Board endorsed in March 2024, banks can obtain reserves at the Reserve Bank's market operations in the quantity they demand, priced near the target. Below that sits a floor: balances left in an Exchange Settlement account, the accounts banks use to settle payments with each other, earn 0.1 percentage points less than the target, so no bank has reason to lend more cheaply. Above it sits a ceiling, a standing facility supplying funds at 0.25 percentage points over. The traded rate sits between those bounds because stepping outside them would be worse for the bank than using the facilities.
A target is not revised, which makes this the only figure here with no revision history at all. That is a property of an administered price rather than a virtue of the data.
The effect on a household arrives slowly, and the Reserve Bank is candid about how slowly: some estimates put the maximum effect at between one and two years after a change, with a large degree of uncertainty around that, because the structure of the economy shifts over time. A decision announced today is therefore still working through mortgage and deposit pricing long after it has stopped being news, and the rate a borrower is paying now reflects decisions taken well before the one in the headlines.
The cadence is fixed and published well ahead. The Board meets eight times a year, down from eleven since February 2024, over two days, with the outcome announced at 2.30pm on the second day and a media conference an hour later. Four of those meetings carry the quarterly Statement on Monetary Policy, and minutes follow about two weeks after each. Meeting dates are announced roughly twelve months in advance, so the calendar is knowable rather than a surprise, and a month with no meeting in it carries no signal.
Longer read: Whose forecast is in a cash rate decision. The forecasts published alongside a rate decision contain a path for the cash rate itself. It is not the Board's intention and not the staff's view. It is drawn from what financial markets are pricing, and understanding that changes how the whole document reads.
Related indicators: Wage growth (WPI) · Mean house price · Inflation rate (CPI) - or the whole set on the Australian economy hub. To put this figure to work on your own numbers, use the mortgage repayment calculator. For how figures like this feed into the exchange rate, read what moves the Australian dollar.