The RBA held the cash rate at 3.60% in September, a cautious pause as inflation sits at 3%, with experts still expecting a cut before year’s end.
Last month the Reserve Bank of Australia (RBA) gave Aussies the rate cut they were waiting for… but before you get too excited… we’re back to holding.
Today the RBA has officially announced they are holding the cash rate at 3.60%.
While many economists and major banks predicted a possible cut by the end of the year, they still predicted a pause in September. That’s because the monthly Consumer Price Index (CPI) increased to 3% in August (up from 2.8% in July), which meant the Australian economy was rebounding faster than economists expected.
So putting things on pause until further data can be observed is pretty on-brand for the RBA who are known to be ‘extremely cautious’.
Back in May 2021, interest rates were at a historic low of 0.1% and economic conditions in Australia were pretty stable…except we started to see the signs of a dragon starting to rear its ugly ugly head.
Yep, with an economic slowdown coming out of the pandemic, and geo-political tensions globally, the inflation-dragon skyrocketed. In fact, by December 2022, the inflation-dragon had roared up to 7.8%. This meant prices for everyday goods like food, fuel and rent shot up.
To bring things back under control, the RBA went hardcore with thirteen cash rate increases in twenty two months…which eventually did its job of slowing down inflation.
The most recent monthly CPI figure is 3% (August, 2025), which is just in the RBA’s target range of 2-3%.
That’s why the RBA is starting to relax, and the slow but sure cutting cycle that started earlier this year is where the cash rate is being reduced to help stimulate the economy again.
But it’s all about finding that sweet spot: keeping the inflation dragon in check without dragging down economic growth.
We continue with the status quo.
If you’ve got a variable-rate home loan, your interest rate and mortgage repayments remain the same.
And good news for savers, your interest earning accounts just avoided a hit, so you’ll keep earning at your current interest rate.
While it might feel like the cash rate is currently quite high, you might have just gotten used to the rock-bottom cash rate during the pandemic.
In the bigger picture, it’s not all that extreme. Back in the mid-2000s, the cash rate was hanging around 6% to 7%, so today’s level is more middle-of-the-road.
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