What is Cash Rate? the cash rate is the interest rate that banks pay to borrow money from other banks in the overnight money market. This rate impacts all other interest rates, such as those on mortgages and deposits.
Technically, it refers to the interest rate on unsecured overnight loans between banks, which are used to manage liquidity. It serves as the operational target for implementing monetary policy.
For the sixth consecutive meeting, the Reserve Bank of Australia (RBA) maintained the cash rate at 4.35%. This decision was largely anticipated by market analysts, especially after the recent quarterly consumer price index data revealed a 3.8% increase for the June 2024 quarter, according to the Australian Bureau of Statistics. While this marks a rise from the 3.6% increase observed in the March quarter, it is consistent with the RBA’s projections.
RBA Governor Michele Bullock recently highlighted the challenging economic conditions, noting that demand remains excessively high. She explained that the RBA is balancing the current strong demand against the fact that monetary policy impacts the economy with a delay. Bullock also pointed out that Australia is not experiencing the same level of progress on inflation as other economies.
As a result, she indicated that the economy is in a difficult situation, and the RBA will continue to exercise caution and stay vigilant.
