What to expect

The cash rate has laid dormant over the last year at a historic low of 0.10%. 

However, the RBA's longstanding promise of a record low cash rate until 2024 now seems unlikely.

While experts don't believe rates will rise from today's meeting, with inflation rising major banks have adjusted their forecasts as to when the first cash rate hike will happen.

CBA had the earliest tip of November 2022, followed by Westpac at February 2023, and ANZ at the second half of 2023.

Inflation rising

The latest Australian Bureau of Statistics' (ABS) data revealed that inflation rose by 0.8% this quarter, bringing it to an annualised rate of 3%.

Last quarter's inflation spiked to an annualised rate of 3.8%, which was attributed to childcare subsidies winding back.

This means inflation is now within the Reserve Bank of Australia's (RBA) target range of 2-3% to potentially trigger a rate rise.

RBA Governor Dr Philip Lowe has repeatedly maintained that the cash rate will not rise until inflation and wage growth are 'sustainably' within the 2 to 3% target range.

"It won't be enough for inflation to just sneak across the 2-3% line for a quarter or two. We want to see inflation around the middle of the target range and have reasonable confidence that inflation will not fall below the 2–3% band again," Dr Lowe said in September.

When will the cash rate rise?

CBA responded to the RBA last week, saying, the RBA "raised the hurdle". 

"We now expect the RBA to commence normalising the cash rate in November 2022 (from May 2023 previously)," the report read.

CBA cited three main reasons for this timeline update:

  • The take-up of the COVID-19 vaccine 
  • The labour market has held up better than we feared during the
    lockdowns in NSW and Victoria.
  • Both NSW and Victoria reopened ahead of our timeline (note this is
    of course linked to the take-up and speed of the vaccine rollout).

"In summary, there has been a host of positive developments recently that mean the economic outlook is brighter," the CBA report said. 

"We return to our pre-delta call for the RBA to commence raising the cash rate in Q4 2022. We have penciled in a first increase
of 15 basis points in November 2022, which would take the cash rate to 0.25%.

"We expect that to be followed by an increase of 25bp in December 2022."

Westpac economic spokesperson Bill Evans said that Westpac's official prediction for the RBA cash rate the first rate will be the February Board meeting in 2023.

"Markets continue to run ahead of the RBA’s likely timing where the policy approach has changed to favour patience," he said. 

Meanwhile, ANZ maintains the cash rate will remain at 0.1% until the second half of 2023. 

RBA skips April 2024 Federal Government bond purchase

Last week, the central bank had an opportunity to step into the market to buy April 2024 Australian Government Bonds.

Until recently, the RBA had been by far the largest purchaser of Government Bonds, which helps drive down the yield, which in turn affects how much interest Scott Morrison and team pay on their government debts.

However, the RBA did not bid.

This indicates that the RBA has abandoned its yield curve control due to rising inflation, and economists expect the central bank to abandon its 'dovish' 2024 guidance on a rate hike.

This would bring the RBA in line with other central banks of advanced economies, pencilling-in cash rate rises in 2022 and 2023.


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
Featured 4.6 Star Customer Ratings
  • No monthly or ongoing fees
  • Unlimited free redraw
  • No application fee
5.99% p.a.
5.90% p.a.
Principal & Interest
Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.09% p.a.
6.11% p.a.
Principal & Interest
Featured Unlimited Redraws
  • No annual fees - None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely - Access your additional payments when you need them
  • Home loan specialists available today
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Image by K8 via Unsplash

Ready, Set, Buy!

Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

By subscribing you agree to our privacy policy