RBA Keeps Cash Rate Steady at 3.85%: What It Means for Aussies Right Now

Omar Rex

7 Aug, 2025

In a move that both surprised and relieved many, the Reserve Bank of Australia (RBA) decided on July 8, 2025, to leave the cash rate on hold at 3.85%. While some analysts had been predicting a small cut to spark more economic momentum, the central bank stuck to its guns—signaling that more data is needed before making any bold moves.

So, what does this mean for regular Aussies, home loan borrowers, savers, and the broader economy? Why did the RBA interest rates stay put, and what are the experts saying?

Let’s break it down in a human, easy-to-understand way—with no economic jargon headaches.

The RBA’s Big Call: Why No Change This Time?

The decision to hold the cash rate steady wasn’t just plucked from thin air. The RBA board has been walking a fine line lately, juggling between taming inflation and keeping the economy from slowing down too much.

According to the RBA’s official statement, while inflation has cooled since its peak, it's still hanging around the upper end of the target range, which is generally between 2% and 3%. That means it’s not yet time to start relaxing monetary policy.

The central bank made it clear that while interest rate cuts are definitely on the table down the track, it's being "prudent" and data-driven" for now.

What's the Cash Rate Anyway?

Before diving deeper, let’s quickly explain what this cash rate business is all about.

The cash rate is the benchmark interest rate set by the Reserve Bank of Australia. It influences all other interest rates across the economy—think home loans, savings accounts, business loans, and more.

When the RBA raises the cash rate, borrowing becomes more expensive, which helps cool down spending and inflation. When it cuts the rate, it makes borrowing cheaper to encourage spending and investment.

So, keeping the cash rate at 3.85% means things stay more or less as they are... for now.

The Aussie Economy in 2025: Where We Stand

Now, why exactly did the RBA hit the pause button?

Here’s a quick snapshot of what’s going on:

Inflation is easing but still sticky in some sectors—especially in rents, electricity, and groceries.
The housing market is showing signs of resilience, with prices stabilizing in major cities like Sydney and Melbourne.
Unemployment is relatively low, hovering around 4.1%, but job ads have slowed a bit.
Consumer spending has softened due to cost-of-living pressures and high interest rates.

All of this paints a picture of an economy that’s cooling—but not cold. That’s why the RBA doesn’t want to jump the gun with a rate cut.

What This Means for Homeowners

If you’ve got a home loan, you’re probably already doing the math.

With rates staying put, variable mortgage holders won’t see any relief—for now. Many Aussie households are still reeling from the aggressive interest rate hikes that took the cash rate from 0.1% to 3.85% in under two years.

But here’s the good news: The decision to pause could mean we’re at—or near—the peak of this interest rate cycle. In other words, you might not have to worry about another hike anytime soon.

Still, banks aren’t always quick to pass on savings when the RBA cuts, and some might even hike fixed rates in anticipation of future moves. So, refinancing or locking in a good deal is something worth considering.

What About Renters?

Renters aren’t off the hook either. With interest rates remaining high, many landlords are continuing to pass on increased mortgage costs via higher rent.

Plus, rental supply is still tight, especially in capital cities. That makes competition fierce and rents still rising in many areas.

The RBA’s pause may not bring immediate relief to renters, but it could signal that some economic stability is on the horizon—which may eventually trickle down to the rental market.

Savers: A Bit of a Silver Lining

Not everything is doom and gloom. If you’re a saver, the RBA holding the line at 3.85% means savings account interest rates are still sitting relatively high compared to the past decade.

That means your money in the bank is earning more than it used to—even if inflation still eats into some of that value.

Term deposits, online savings accounts, and even bonus saver accounts are offering better returns now than they have in years.

So if you’ve got extra cash, now’s a good time to shop around for the best rates.

Business Owners and Investors

For small businesses, the RBA's decision is a mixed bag. Business loans and credit still carry higher interest rates, which can be a drag on growth and expansion.

But on the flip side, investor confidence may be bolstered by the RBA’s cautious, steady hand.

Investors in the share market welcomed the news, with the ASX 200 ticking upward slightly after the announcement. Lower rates in the future could be good news for equities and real estate investment trusts (REITs).

Global Influences: What’s Happening Elsewhere?

It’s not just what’s happening in Australia that matters. Global economic trends are playing a major role in how the RBA sets policy.

The US Federal Reserve is also in a “wait and see” mode, though inflation there has been stickier.
China’s economic slowdown is weighing on Australian exports.
Global oil prices have been volatile, and that feeds into energy costs domestically.

All of this makes the RBA cautious. It’s a balancing act—stay tough on inflation without choking the economy completely.

What’s Next? Rate Cut in Sight?

So when might we see that long-awaited interest rate cut?

Most economists are betting on late 2025 or early 2026. But the RBA has made it clear it wants to see solid evidence that inflation is under control before making any major moves.

In the meantime, the focus is on:

Inflation data (especially core inflation)
Wage growth
Job market conditions
Consumer spending trends

If inflation dips further and the economy keeps cooling without crashing, that’s when the RBA might start cutting.

Expert Opinions: What the Economists Say

Here’s what a few major banks and economists are saying about the decision:

Westpac’s Chief Economist: “The RBA is playing it safe. They’re waiting for more clarity before taking any action. We still believe a rate cut is likely by December.”
Commonwealth Bank: “The decision reflects a wait-and-watch strategy. While not hawkish, it’s not dovish either. The RBA is keeping all options on the table.”
ANZ Research: “We now expect the first rate cut to occur in February 2026. It depends on inflation sticking to the path back to target.”

Tips for Everyday Aussies During This Rate Hold

So, what should you do now that the cash rate is staying at 3.85%? Here are a few down-to-earth tips:

1. Revisit Your Budget

With prices still high, take a close look at your expenses. Trim what you don’t need and be honest with yourself.

2. Talk to Your Bank

If you’re struggling with your mortgage repayments, it never hurts to call your lender. You might be able to get a better deal—or switch to a more flexible plan.

3. Lock in Good Rates

Whether it’s a savings account or a fixed-term deposit, take advantage of high returns while they last.

4. Stay Informed

Keep an eye on future RBA announcements, inflation data, and economic updates. Things can change quickly, and the more informed you are, the better choices you’ll make.

Final Thoughts: A Calm Before the (Economic) Shift?

The RBA’s decision to keep interest rates at 3.85% in July 2025 is a sign of stability—and caution.

While a rate cut would’ve been welcome news for many, especially homeowners, the hold is a clear message: the RBA is watching, waiting, and making data-driven decisions to keep the economy on track.

The good news? We're likely near the end of this high-interest cycle. The bad news? We’re not quite out of the woods yet.

Either way, now’s the time to plan, prep, and protect your finances—because when the RBA eventually moves, you’ll want to be ready.