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Central bank · Australia·AUD

Reserve Bank of Australia

The RBA sets Australian monetary policy via the Reserve Bank Board, meeting 8 times per year. Track the cash rate, Statement on Monetary Policy, Governor Bullock statements and how RBA decisions drive AUD/USD and AUD crosses.

Policy rate
3.85%
Cash Rate
Effective
2026-05-20
Next meeting
2026-07-01
Cadence
8 times per year (post-2024 review)
TL;DR

The Reserve Bank of Australia runs Australian monetary policy via the Reserve Bank Board, meeting 8 times per year post-2024 governance review. The Cash Rate is the policy anchor. Quarterly Statements on Monetary Policy (SoMP) carry biggest market reactions. RBA frequently leads global cycle turns.

About the RBA

The Reserve Bank of Australia was established in 1960. Headquartered in Sydney, the RBA conducts monetary policy and issues banknotes. Since the 2024 governance review, monetary policy is set by the Monetary Policy Board (separate from the corporate governance Reserve Bank Board) — 9 members including 6 external appointees with academic and industry expertise.

The RBA mandate is to promote the economic prosperity and welfare of Australians, via price stability (2-3% CPI), full employment, and contributing to financial stability. The inflation target is a band rather than a point — more flexible than Fed/ECB single targets.

The Cash Rate is the policy rate — the overnight rate at which banks lend reserves to each other. Since 2007, the RBA has used a corridor with the deposit facility rate at Cash Rate -25bp and the lending facility at Cash Rate +25bp. Reserves are remunerated, supporting the Cash Rate as the operational floor.

Mandate & framework

Framework
Inflation targeting: 2-3% over the cycle
Inflation target
2-3% CPI band, over the cycle

What drives RBA policy

  • Trimmed Mean CPI (the RBA's preferred core measure): sustained above 3% supports tighter policy bias.
  • Wage Price Index (quarterly, second Wednesday of cycle month): wages above 4% YoY anchor hawkish bias.
  • Unemployment rate via the monthly Labour Force survey (third Thursday).
  • Iron ore and coal export prices (commodity backbone of AUD trade balance).
  • Chinese steel demand and PMI new orders — direct read on Australian commodity export earnings.
  • Statement on Monetary Policy (SoMP) forecasts published 4 times per year, alongside specific meetings.

Recent actions

2026-05-20
Cut Cash Rate by 25bp to 3.85% from 4.10% as Trimmed Mean CPI eased to 2.9%
2026-02-18
Cut by 25bp to 4.10% from 4.35% — first cut of 2026
2025-12-09
Held at 4.35% citing sticky services inflation and tight labour market
2023-11-07
Last hike to 4.35%, the cycle peak
2022-05-03
Started tightening cycle with first hike from 0.10% to 0.35%

People also ask

What is the Reserve Bank of Australia?

Australia's central bank, established 1960. Sets monetary policy via the Monetary Policy Board (since 2024 governance review), conducts banking supervision via APRA partnership, and issues banknotes. Headquartered in Sydney.

When does the RBA meet?

Post-2024 governance review: 8 times per year (down from 11). Decisions are announced at 03:30 UTC (14:30 Sydney) on the first Tuesday of cycle months. Press conferences follow at 04:30 UTC. Four meetings include the Statement on Monetary Policy (SoMP) with full forecasts.

What is the Cash Rate?

The RBA's policy rate — the overnight rate at which banks lend reserves to each other. Set by the Monetary Policy Board at each meeting. The corridor is Cash Rate +/-25bp via deposit and lending facilities. AONIA (the AUD reference rate) trades close to Cash Rate.

How does the RBA affect AUD/USD?

Hawkish RBA signals widen the RBA-Fed spread, lifting AUD/USD. Dovish signals do the opposite. The 2Y ACGB-Treasury spread is the cleanest leading indicator. Iron ore prices overlay the rate signal via the commodity-export channel.

What is the 2024 RBA review?

The 2023-24 RBA Review reformed the RBA's governance and policy framework. Created a separate Monetary Policy Board with external expert members. Reduced meeting cadence from 11 to 8 per year. Reformed communications — longer-format press conferences post-decision.

Why does iron ore matter for AUD?

Iron ore is ~60% of Australian exports by value, with China the dominant buyer. Iron ore prices feed directly into AUD via the trade balance and terms of trade. Chinese steel demand shifts (property crisis, infrastructure spending) move iron ore and AUD together.

Who is the RBA Governor?

Michele Bullock, in role since September 2023, succeeding Philip Lowe. First female RBA Governor. Career RBA economist with 40+ years at the bank. Manages the bank through the 2024 governance review and the cutting cycle from 2026.

FX pairs affected by RBA policy

Primary sources