Cash Rate

Plain-English definition. The cash rate is the Reserve Bank of Australia's target interest rate for unsecured overnight loans between banks. It is a benchmark for monetary policy, not the interest rate charged on a home loan.

How it works in Australia. The RBA Monetary Policy Board decides whether to raise, lower or hold the cash rate. The RBA then operates in financial markets to keep the actual overnight cash rate close to that target. Changes influence bank funding, deposit rates, business lending and home loan pricing, but lenders decide whether, when and how much to change each retail product.

Current example. On 11 August 2026, the RBA unanimously held the cash rate target at 4.35%, effective 12 August. That hold added zero percentage points to the cash rate. It did not require a lender to reduce, increase or leave a particular mortgage rate unchanged.

For a $600,000 principal-and-interest loan with 30 years remaining, entering 6.00% produces an indicative monthly repayment of about $3,597. Entering the 4.35% cash rate instead would answer the wrong question unless 4.35% were genuinely the rate on that loan.

Common confusion. A cash-rate movement is not automatically a matching home-loan movement. A fixed rate can stay unchanged until expiry. A variable rate can change on a lender-selected date. A lender can also reprice for reasons other than an RBA decision.

Use the Mortgage Repayment Calculator with the retail rate shown on the loan account or lender notice. Use the Rate Change Impact Calculator to test an assumed change. Neither tool predicts an RBA decision or a lender's response.

Sources. RBA Cash Rate Target Overview and RBA Monetary Policy Decision, 11 August 2026, checked 12 August 2026.

This entry is general information only. It is not financial advice, credit advice, a lender quote, an approval or an interest-rate forecast.

Last updated: 12 August 2026.