Latest RBA Interest Rate Announcement and History
Tuesday 8th July 2025
At its meeting today, the Board decided to decided to leave the cash rate target unchanged at 3.85 per cent.
Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. In the March quarter, headline inflation, which has partly been affected by temporary cost of living relief, was at the midpoint of the target range while trimmed mean inflation was at 2.9 per cent.
Uncertainty in the world economy remains elevated. While the final scope of US tariffs and policy responses in other countries remains unknown, financial market prices have rebounded with an expectation that the most extreme outcomes are likely to be avoided.
The Board continues to judge that the risks to inflation have become more balanced and the labour market remains strong. Nevertheless it remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply.
The Board will be attentive to the data and the evolving assessment of risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market. The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.
To view the full statement of Michele Bullock, Governor of the Reserve Bank, please click here.
Why do RBA interest rate decisions matter?
RBA interest rate decisions are the key tool for the RBA to influence the Australian economy. They matter for a number of reasons, and affect people of all ages and circumstances:
Deposit holders (including individuals and businesses) will experience this directly through the interest rates offered by banks. To some extent, this also applies to the cash and defensive assets within super and other accounts.
Borrowers (again, including individuals and businesses) feel the effects through the interest and principal repayments on variable rate loans (and indeed on new fixed rate loans).
Lower interest rates tend to stimulate the economy, by improving cashflow for individuals and businesses with debt, as well as encouraging investment spending and employment. Conversely, higher rates restrict household & corporate budgets and spending, putting the brakes on the economy.
Expectations of economic performance, along with other mechanisms for pricing financial markets, tend to provide a positive environment for growth investments like shares and property, which feature heavily in more investors portfolios including super.