The cash rate is the rate banks charge one another for unsecured loans overnight, and the Reserve Bank’s Monetary Policy Board sets a target for it. As at the decision of 29 September 2026, the target is 4.60 per cent, after an increase of 25 basis points.
General informationThis page explains how the cash rate is set and published. It is not financial advice about any loan or deposit, and it does not forecast a decision. The current target and its history are on the Reserve Bank’s Cash Rate Target page.
What the cash rate is
The Reserve Bank calls the cash rate the (near) risk-free benchmark rate for the Australian dollar; in financial markets it is also known as AONIA. Over recent decades the Bank has targeted it because, in the Bank’s account, it strongly influences other interest rates and is the base on which the economy’s whole structure of rates is built.
The Board does not take instructions from the government of the day on monetary policy; its decisions are made apart from the political process.
The cash rate is the Board’s usual tool, not its only one. If the cash rate is nearing zero and more stimulus is judged necessary, the Board would consider additional monetary policy tools, and the Reserve Bank used some of them in 2020, during the COVID-19 pandemic.
From meeting to effect
A decision follows the same path every time, as the Reserve Bank describes it.
- The meeting. The Board meets eight times a year, after key data on inflation and economic activity is released. Each meeting starts on a Monday afternoon and ends the following day. Staff prepare papers on the Australian and world economies and financial markets, including a recommendation for the decision.
- The statement, at 2.30 pm. The decision is published on the Reserve Bank’s website at 2.30 pm after each meeting, and the Governor holds a media conference to explain it. A media release is issued after every meeting, whether or not the target changes; before December 2007, releases came only when it did.
- The next day. Any change to the cash rate target takes effect from the day after the announcement.
- The minutes, two weeks on. Minutes of each monetary policy meeting are published two weeks after it.
The September 2026 decision shows the two dates side by side: the statement is dated 29 September 2026, and the Reserve Bank’s table records the new target in effect from 30 September 2026. On 29 September itself, the target in effect was still the previous one, 4.35 per cent.
2026, as the Reserve Bank records it
The Reserve Bank’s table lists every change to the target, and every decision to leave it unchanged, since 6 January 2008. Its rows for 2026, to the end of September:
| In effect from | Change, percentage points | Cash rate target |
|---|---|---|
| 4 February 2026 | +0.25 | 3.85% |
| 18 March 2026 | +0.25 | 4.10% |
| 6 May 2026 | +0.25 | 4.35% |
| 17 June 2026 | No change | 4.35% |
| 12 August 2026 | No change | 4.35% |
| 30 September 2026 | +0.25 | 4.60% |
The 29 September statement refers to “the three increases in the cash rate target since the beginning of the year”, which are the February, March and May rows above; September’s was the fourth. The statement adds that the decision was unanimous.
The same table shows the path before 2026. The target was lowered by 0.25 percentage points three times in 2025, in February, May and August, to 3.60 per cent, and held there for the rest of that year. Reading a single decision without the rows around it misses which way the target had been moving.
What the Board is aiming at
Under the Reserve Bank Act, as amended in 2024, the Board sets monetary policy in the way it judges best contributes to price stability and full employment in Australia. The Statement on the Conduct of Monetary Policy, agreed between the Board and the Treasurer, records that price stability is best met through a flexible inflation targeting framework, with a goal of keeping consumer price inflation between 2 and 3 per cent.
From the cash rate to a home loan
The Reserve Bank explains the chain in stages. Changes in the rates it targets pass quickly to other market rates, such as money market rates and bond yields. Because most deposits and loans in Australia are at variable or short-term fixed rates, a high share of a change flows through to deposit and lending rates. Even so, deposit and lending rates do not always move in lockstep with the cash rate, because other forces, including competition between banks, also act on them.
The effect on spending and inflation is slower: the Bank says it comes “with much longer lags, because it takes time for individuals and businesses to adjust their behaviour.”
Reading a statement for what it says
Each statement gives the Board’s reasons on the day. On 29 September 2026 the Board said there were signs that growth in consumer spending was easing, “although housing prices have fallen in most capital cities and new housing loans have declined noticeably.” It also noted “uncertainties about the economic effects of the downturn in the housing market.”
Those are the Board’s words as at that meeting, and the official figures behind them are published separately: house values in the total value of dwellings and new loans in the lending indicators. A statement describes the Board’s judgement on its date. It is not a schedule of future decisions, and this guide reads none into it.
The Reserve Bank also explains its policy through four Statements on Monetary Policy a year and the Governor’s twice-yearly appearances before the House of Representatives Standing Committee on Economics.