A decade of RBA rate decisions: how the cash rate went full circle

Three rate rises in three months put the cash rate back where it was in November 2023. For anyone holding a mortgage or trying to get one, the past decade is the best guide to what happens next.

The short answer

The Reserve Bank of Australia's cash rate target is 4.35 per cent. The Monetary Policy Board held it there on 11 August 2026, its second meeting in a row without a change. The next decision lands on 29 September 2026.

What the cash rate actually is

The cash rate is the interest rate banks pay to borrow money from each other overnight. That is the whole definition. It is a wholesale rate between financial institutions, and no household ever pays it directly.

It matters because it sets the floor for everything else. The RBA explains that because the cash rate affects what banks pay for funding, it flows through to the rates they charge on mortgages and business loans, and the rates they pay on deposits. From there it reaches "economic activity, employment and inflation".

The RBA does not set mortgage rates. It sets the price of money at the wholesale level, and the banks decide how much of each move to pass on.

Three things happen when the cash rate rises.

Variable mortgage repayments go up, usually within weeks, which takes money out of household budgets. Borrowing capacity falls, because lenders assess applicants at their advertised rate plus a serviceability buffer, so the same salary supports a smaller loan. And saving becomes more rewarding relative to spending, which cools demand across the economy.

When the cash rate falls, all three run in reverse. That is why rate cuts and property price growth tend to arrive together, though as the past decade shows, the relationship is looser than most people assume.

Where the rate sits now, and why

The Board's problem in August 2026 is that inflation is falling, but not fast enough.

Australian Bureau of Statistics figures show headline inflation at 3.8 per cent over the year to June 2026, down from 4.0 per cent in the year to May and a March peak of 4.6 per cent. Trimmed mean inflation, the measure the RBA watches most closely because it strips out one-off price swings, sat at 3.6 per cent. Both are above the 2 to 3 per cent target band.

The RBA's statement said headline inflation is "still too high" and that trimmed mean inflation "remains elevated". The Board does not expect inflation back near the midpoint of its target until late 2027.

Governor Michele Bullock was unusually direct about what the Board discussed. "We did not discuss a rate cut at this meeting, only a rate hike or to hold," she said, adding that the Board "isn't ruling out that there might be a need for further interest rate rises".

Cherelle Murphy, chief economist at EY Oceania, described the outcome as "a hawkish pause, not a signal that the tightening cycle has ended".

The counterweight is the labour market. ABS data puts unemployment at 4.4 per cent in June 2026, above the 4.2 per cent the RBA had forecast. Commonwealth Bank economists expect the cash rate to stay at 4.35 per cent for the rest of 2026, with two cuts forecast for May and August 2027.

How often the rate changes, and who decides

The Monetary Policy Board meets eight times a year. It replaced the old Reserve Bank Board on 1 March 2025, following a review of the RBA, and meets less often than the previous board's 11 meetings.

Meetings run over two days. The decision is announced at 2.30pm on the second day, the Governor holds a media conference at 3.30pm, and the minutes are published two weeks later. Four of the eight meetings, in February, May, August and November, coincide with the RBA's quarterly Statement on Monetary Policy.

The Board has nine members: the Governor as chair, the Deputy Governor, the Secretary to the Treasury, and six external members appointed by the Treasurer.

It has two objectives, and they can pull in opposite directions. One is keeping consumer price inflation between 2 and 3 per cent. The other is sustained full employment. When inflation is high and unemployment is rising at the same time, as in 2026, the Board has to choose which risk it fears more.

Meeting eight times a year does not mean changing the rate eight times. In 2017 and 2018 the Board did not move the cash rate once across 24 months. In 2022 it raised rates at eight consecutive meetings.

Ten years, five turning points

The decade from 2016 to 2026 covers the lowest cash rate in Australian history and the fastest tightening cycle in a generation. It ends on the same number it hit in November 2023.

2016 to 2019: the long drift down

The RBA cut to 1.50 per cent in August 2016 and then did nothing for two full years. Inflation was persistently below target and wage growth was weak. When the Board moved again in 2019 it was to cut three times, to 0.75 per cent by October, as the economy slowed well before anyone had heard of COVID-19.

2020 to 2021: emergency settings

COVID-19 changed the rate in weeks. The RBA cut twice in March 2020, to 0.50 per cent and then 0.25 per cent, and again in November 2020 to 0.10 per cent, the lowest cash rate in Australian history.

Property behaved in a way almost nobody predicted. CoreLogic recorded a national dip of just 2.1 per cent between April and September 2020, then the strongest boom in three decades. National dwelling values rose 22.4 per cent in the year to January 2022, which CoreLogic noted at the time was "the highest annual rate of growth since June 1989".

2022 to 2023: the fastest tightening in a generation

Inflation surged as supply chains failed and energy prices climbed. The RBA began lifting rates in May 2022 and did not stop until November 2023: 13 increases in 18 months, from 0.10 per cent to 4.35 per cent. That is 425 basis points, the sharpest tightening cycle in a generation.

Property turned immediately. CoreLogic reported a national peak-to-trough decline of about 9 per cent between April 2022 and February 2023. That figure has since been revised. Cotality now cites a shallower fall of about 8.2 per cent for the same episode.

2024 to 2025: the plateau, then relief

The cash rate sat at 4.35 per cent for 14 months, from December 2023 to January 2025, though that was still shorter than the 1.50 per cent hold that ran from 2016 to 2019. Cuts finally came in February, May and August 2025, taking it to 3.60 per cent.

Property responded quickly. Cotality recorded national dwelling value growth of 8.6 per cent across calendar 2025, the strongest calendar year gain since 2021.

2026: the round trip

The relief lasted six months. Global oil supply disruption pushed inflation back up, and the RBA raised rates three times in the first half of 2026, on 4 February, 18 March and 6 May, returning the cash rate to 4.35 per cent. It has been held there since.

The property market turned again. Cotality's Home Value Index peaked in March 2026 and has fallen since, with a 0.7 per cent national drop in July 2026, the steepest monthly decline since December 2022. The national median dwelling value was $928,421.

What a decade of this means for property

Here is the figure that complicates every simple story about rates and property.

Over the 10 years to 30 June 2026, national dwelling values rose 73.7 per cent, according to Cotality. Combined capital cities rose 65.6 per cent. Regional Australia rose 103.5 per cent, comfortably outpacing the cities.

Across that same decade the cash rate went from 1.50 per cent to 0.10 per cent to 4.35 per cent and back down and up again. If low rates were the only thing driving property values, the past four years would have been a sustained decline. They were not.

Three lessons are worth taking from the decade.

Rates move property, but they are not the only lever. Migration, construction costs, land supply, lending standards and tax settings all pull at the same time. The 2021 boom had record-low rates behind it, but also stimulus payments, forced saving and a rush for space. The 2025 recovery came with cuts, but also a supply shortfall.

The reaction is fast at the turns and slow in the middle. Both the 2022 downturn and the 2026 downturn began within months of the first rate rise. Long holds produce much less drama in either direction.

Higher rates hurt borrowers more than they hurt prices. The 2022 to 2023 correction took about 9 per cent off national values, and the national index was back at a record high by November 2023, nine months after the trough. The repayment increase that came with it did not reverse anywhere near as quickly.

For anyone weighing a purchase at 4.35 per cent, the practical question is not whether rates will fall. Commonwealth Bank expects cuts in 2027, and Bullock has said a cut was not even discussed in August. The practical question is whether you can carry the loan at today's rate, and at a rate somewhat above it, given the Board has explicitly kept further rises on the table.

That is a personal calculation, not a market forecast. But a decade of RBA decisions suggests one thing clearly: anyone who buys assuming the cash rate will sit still is planning around the least likely outcome.