Real-time analysis and impact assessment of Australia's monetary policy
Historical Rate Trend
RBA Cash Rate Target over time
Previous RBA Cash Rate Target4.10%
RBA credibility management, awaiting Q1 inflation data, and global trade uncertainties
The RBA is highly likely to hold rates at 4.10% on April 1, 2025, with an 88-92% probability of maintaining current rates. Key factors include stubborn trimmed mean inflation at 2.7%, recent labor market softening, and the RBA's desire to assess the impact of February's rate cut before further easing. Markets and all major banks expect a hold, with potential for a cut in May after Q1 inflation data is released.
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in April, cut in May
in April, cut in May
in April, due to global risk
Hold until August 2025
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Calculate how much you’ll save from the latest RBA interest rate cut
Certain key economic factors influence rate cuts. Learn the current stats here
Inflation (CPI)Consumer Price Index, annual change
2.54.2%
UnemploymentSeasonal Adjusted
4.12.5%
GDP GrowthYear-on-year
1.362.5%
Wage GrowthWage Price Index, annual change
3.2-8.6%
Housing PricesYear-on-year change in capital cities
2.0-13.0%
AUD/USDAustralian Dollar to US Dollar
0.6300.000%
Impact and opportunities
Founder
Updated on 26 Apr 2025
In February 2025, the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to 4.10%, marking its first rate reduction since November 2020. The move, which aligned with market expectations, reflects growing confidence that inflation is easing towards the RBA's target range of 2-3%.
The RBA's February 2025 decision to cut the cash rate was rooted in a noticeable slowdown in underlying inflation, which was moving sustainably toward the target range of 2-3%. Higher interest rates had previously played a critical role in balancing aggregate demand and supply. However, lingering uncertainties remain, including a slower-than-expected rebound in private demand and concerns about the sustainability of household spending recovery that began in late 2024.
Australia’s cash rate landscape has seen dramatic shifts over the years. Rates peaked at 17.50% in January 1990 and fell to a record low of 0.10% during the pandemic in 2020. The current rate of 4.10% sits slightly above the long-term average of 3.87% (from 1990 to 2025).
Despite the recent cut, this still indicates a relatively restrictive monetary policy stance. The RBA remains cautious, given global economic uncertainties and the need to ensure inflation continues to decline sustainably.
A cash rate cut typically lowers interest rates in the economy. For borrowers, this generally means cheaper loans. Mortgage, personal loan, and credit card interest rates often decrease, making repayments more affordable. This can be a relief for those with variable-rate loans or those looking to borrow.
For savers, a cash rate cut can be less favorable. Banks tend to reduce interest rates on savings accounts, term deposits, and other investments. This means savers may earn less on their deposits, impacting their returns.
Every month, the Reserve Bank of Australia (RBA) meets to assess the country's economic landscape and decide whether to adjust the official cash rate. These monetary policy decisions are pivotal—they influence borrowing costs, spending habits, and even the broader direction of Australia's economy.
But how does the RBA arrive at these critical decisions? We understand this to be a process grounded in data, caution, and a deep understanding of both local and global economic trends.
At the heart of the RBA's decision-making process is its dual mandate:
To achieve these goals, the RBA conducts a thorough analysis of key economic indicators, including:
The Reserve Bank of Australia (RBA) plays a crucial role in managing the economy by setting the official cash rate. Its goal is to ensure economic stability by keeping inflation within the 2–3% target range while also supporting employment and growth.
Each month, the RBA assesses a range of economic indicators before deciding whether to raise, lower, or hold the cash rate. Here's how these factors influence its decision-making process.Â
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Founder
Pravin Mahajan is a seasoned technology leader with deep expertise in financial innovation and product strategy. He focuses on leveraging AI and automation to streamline financial processes, making them more accessible and efficient. Passionate about digital transformation, Pravin drives innovation in fintech, helping businesses and consumers adapt to an evolving financial landscape. His insights on technology, finance, and product strategy are widely recognised in industry forums.
