RBA Cash Rate in Australia
Australia's central bank maintained relatively low policy rates from 2013 to 2022, reflecting a stable economic environment. Rates were cut several times to historic lows, particularly during the COVID-19 pandemic, to support economic growth and mitigate the pandemic's impact. By 2022, as the economy recovered, rates began to be normalized, but the overall approach remained cautious, balancing economic recovery with potential inflationary pressures.
The RBA Cash Rate ended 2022 at 3.1%, up from the 0.1% end-2021 value and up from the reading of 2.5% a decade earlier. For reference, the average policy rate in the Asia-Pacific region was 3.7% at the end of 2022. For more interest rate information, visit our dedicated page.
Australia Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for Australia from 2013 to 2022.
Source: Reserve Bank of Australia.
Australia Interest Rate Data
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| RBA Cash Rate (%, eop) | 1.50 | 0.75 | 0.10 | 0.10 | 3.10 |
| 90-Day Bank Bill (%, eop) | 2.02 | 0.90 | 0.02 | 0.06 | 3.17 |
| 10-Year Bond Yield (%, eop) | 2.32 | 1.37 | 0.97 | 1.67 | 4.05 |
After four holds, RBA hikes in November
At its monetary policy meeting on 7 November, the Reserve Bank of Australia (RBA) hiked the official cash rate (OCR) to 4.35% from 4.10%. The decision follows four consecutive meetings in which the Bank stood pat and translates into a cumulative 425 basis point increase in the OCR since May 2022.
The Bank decided to tighten the monetary policy stance due to the slower-than-expected decline of inflation towards its 2.0–3.0% target range. The Bank now sees inflation hovering at around 3.5% by the end of 2024 and expects it to decline to the upper bound of the target range in late 2025.
The Bank maintained a hawkish tone in its communiqué, stating that it “remains resolute in its determination to return inflation to target [within a reasonable timeframe] and will do what is necessary”. The path of future monetary policy will depend on data and the evolving outlooks for inflation, household spending, the labor market and the global economy. Our panelists expect the RBA to start easing its policy stance next year as inflation moderates. The next monetary policy meeting is scheduled for 5 December.
Commenting on the outlook, ING’s Robert Carnell stated: “If … [inflation doesn’t slow down considerably over the coming months], then instead of the rate cuts that we expect could be on the radar by mid-2024, we might still be looking at some further tightening before we can call this rate cycle truly over. As the RBA notes in their statement, ‘There are still significant uncertainties around the outlook’". Meanwhile, Alvin Liew, senior economist at UOB, said: “Following today’s expected hike and the more dovish-sounding policy guidance in November, we keep our RBA policy outlook unchanged. We expect the RBA to keep the peak policy rate of 4.35% for December and Q1 2024. Thereafter, we expect the first rate cut to take place in Q2 2024. We are penciling a total of 85-bps cuts next year to bring the RBA cash rate to 3.5% by Q4 2024.”
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Australian interest rate projections for the next ten years from a panel of 17 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Australian interest rate.
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