Understanding the RBA cash rate and your household

What the cash rate is

The Reserve Bank of Australia (RBA) sets a target for the cash rate, the interest rate banks charge each other for overnight loans. It's the main tool the RBA uses to influence inflation and employment.

Why it matters for households

Changes in the cash rate flow through to variable mortgage rates, savings account rates and, over time, to the broader economy. A rise can increase repayments for variable-rate borrowers and lift returns for savers; a cut works the other way.

How to think about it for your budget

• If you have a variable-rate mortgage, model a higher repayment in your plan so a rise doesn't surprise you.
• If you're saving, note that returns on savings accounts may move with the cash rate.
• Treat forecasts as uncertain. The RBA's own statements emphasise that decisions depend on incoming data.

Where to read more

The RBA publishes its cash rate decisions, statements and explanatory material. We link to the official site below so you can read announcements directly rather than relying on summaries alone.

*This is general information, not financial advice. The RBA does not endorse Payday Compass.