12 May 2022

Who Decides the Cash Rate?

Cash Rate and the RBA

In 1959, Australians established the Reserve Bank of Australia. The RBA remains the financial central planning authority that oversees monetary policy. They also determine the cash rate. The Bank meets once a month except in January. During their Tuesday meeting, they decide if the rate will remain the same, go up, or go down. For example, on April 5, 2022, the RBA decided to leave the rate as is at .10%. Moreover, they have left the rate at the same level for 16 straight months.

Analysts believe that the RBA will raise the rates eventually. It impacts the cost of transactions for lenders during the after hours. If the rate goes up, lenders will raise the rates for borrowers through interest rates. 

Since the RBA oversees the economic and monetary policy, they have the most information to determine cash rates. The goal is to keep the economy stable so that it doesn’t run sluggish or it doesn’t become overheated. The professionals who make up the RBA consider several data points before making a decision. For example, they take a look at the consumer price index. They also take a look at consumer habits. By keeping the economy stable, consumers can enjoy purchasing goods and borrowing for projects at reasonable prices and rates. 

Keep in mind that the cash rate does impact other products, too, including our Mortgage House car loan.

Cash Rate and the RBA

The RBA has the task of determining the cash rate in Australia. Based on the rate, lenders determine the interest rates. To explore your mortgage options, contact our Mortgage House lending specialists.

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