Australia · Explainer

The RBA and the Fed: how they differ

Both are central banks. Both set an overnight interest rate for banks. Both try to keep inflation in check without wrecking the jobs market. But the way their decisions reach a household is quite different, and the headlines often blur the two.

Why Australians feel a move sooner

This is the big one. The RBA notes that most Australian deposits and loans are at variable or short-term fixed rates, so its decisions pass through quickly. When the cash rate rises, a typical Australian variable home loan rises with it within weeks.

In the United States most home loans are fixed for 30 years. A Fed decision does not change the repayment on an existing fixed mortgage at all. New US mortgage rates track longer-term bond yields, which often move before the Fed meets. The US households that feel a Fed move quickly are mostly those with credit cards and home equity lines tied to the prime rate.

Timing, from Adelaide

The RBA publishes its decision at 2.30 pm Sydney time, which is 2.00 pm in Adelaide, on the second day of each meeting. The Fed publishes at 2.00 pm in Washington, which lands in the early hours of the next morning in Australia. That is why US decisions often show up in Australian news “overnight”.

Does the Fed move the RBA?

Not directly. The RBA sets policy for Australian conditions and can go its own way. But US rates affect the Australian dollar and global bond yields, and the RBA watches both. In the minutes of its September 2026 meeting, the Board noted that a floating exchange rate lets Australia set its own policy, but does not shield it from bigger shifts in global interest rates.

General information only, not financial advice.

Sources: RBA, About Monetary Policy; RBA media release 2026-30, 3 November 2026; Minutes of the Monetary Policy Board meeting, 28–29 September 2026; FOMC statement, October 28, 2026; FOMC meeting calendar.

RBA rate board · US rate board · How the federal funds rate works