CASH RATE ON HOLD IN APRIL : WHAT IS A CASH RATE AND WHAT DOES IT MEAN FOR ME ?
Andrew Thompson | National Director , Loan Market Group
After its April board meeting , the Reserve Bank of Australia ( RBA ) decided to hold the cash rate for the first time since May 2022 . The cash rate remains at 3.6 per cent . This could provide some reprieve to households that have experienced regular hikes to their interest rates over the last 12 months .
It ’ s been well reported the cash rate has been going up , and with it interest rates for home loans . But what ’ s the connection between the two ? And what exactly is the cash rate ? I break down how it could actually impact you .
What is a cash rate ?
The cash rate is an interest rate set by the RBA that determines what banks and lenders pay to borrow money overnight . This then gets passed down to the consumer through the bank or lender ’ s own interest rates , both for loans and deposits such as savings accounts .
What is the RBA and why does it set the cash rate ?
The RBA is Australia ’ s central bank , made up of a board of members appointed by the Treasurer . It drives monetary policy for the nation with the aim to encourage economic stability , employment and prosperity for Australians . It aims to meet its inflation target and maintain a strong financial system , as well as issuing the country ’ s banknotes .
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