Australia · Explainer
How the RBA cash rate works
The cash rate is the interest rate on unsecured overnight loans between banks. The Reserve Bank of Australia sets a target for it: one number, not a range. Since 4 November 2026 that target has been 4.85%.
You will not see “cash rate” on your home loan statement. You will see your lender’s variable rate, which the lender sets. The cash rate sits upstream of that number.
Who decides, and when
The decision belongs to the RBA’s Monetary Policy Board, chaired by the Governor. The Board meets eight times a year. Each meeting starts on a Monday afternoon and ends the next day, and the decision is published on the RBA website at 2.30 pm Sydney time on that second day. In Adelaide that is 2.00 pm, year-round. Any change takes effect the following day.
The Governor holds a media conference after each meeting. Minutes come out two weeks later. Four times a year the RBA also publishes a Statement on Monetary Policy with its forecasts.
What it is trying to do
The Board’s job is price stability and full employment. In practice that means aiming to keep consumer price inflation between 2 and 3 per cent, while keeping as many people in work as possible. When inflation runs too hot, the Board can lift the cash rate to cool spending. When the economy is weak and inflation is low, it can cut.
How it reaches your home loan
Banks fund themselves partly with short-term money, so their costs move closely with the cash rate. The RBA’s own description is that in Australia most deposits and loans are at variable or short-term fixed rates, so there is a high pass-through of its decisions to the rates households pay.
- Variable home loans usually move by a similar amount within a few weeks. Your lender will write to you with the new rate and repayment.
- Fixed home loans do not change until the fixed period ends. The rate you roll onto will reflect where rates are at that point.
- Savings accounts and term deposits are set by each bank. Many follow the cash rate, often with a lag and sometimes only partly.
- Credit cards in Australia often carry high rates that do not move much with the cash rate. Check your statement rather than assuming a change.
Basis points, in plain terms
One basis point is 0.01 percentage points. A 25-basis-point move is a quarter of one per cent. On $100,000 of debt for a year, that is about $250 of interest if the rate applies all year and the balance never changes. Real home loans shrink as you pay them down, so the real figure is a little lower. See what 25 basis points does to a variable home loan for the full maths.
General information only. It does not take your objectives, financial situation, or needs into account and is not financial advice.
Sources: RBA, About Monetary Policy; RBA cash rate target table; RBA media release 2026-30, 3 November 2026.