Interest rates and monetary policy
Interest rate history
Track the Reserve Bank of Australia's official cash rate and Division 7A prescribed rates over time.
Understanding interest rates
RBA cash rate
The Reserve Bank of Australia (RBA) cash rate is the interest rate on overnight loans in the money market. It is the primary tool used by the RBA to influence economic activity and inflation. Changes to the cash rate affect borrowing costs, savings returns, and asset prices throughout the economy.
Division 7A rate
The Division 7A benchmark interest rate is prescribed by the Australian Taxation Office (ATO) to loans made by private companies to shareholders or their associates. This rate is updated annually and is based on the RBA indicator lending rate. It ensures that loans are charged at a commercial rate to prevent tax avoidance.
How these rates impact investments and spending
Higher interest rates:
- Better returns on cash investments
- Higher borrowing costs
- Property price pressure
- Reduced consumer spending
Lower interest rates:
- Lower cash returns
- Lower borrowing costs
- Higher asset prices
- Increased consumer spending