Neutral Cash Rate
The theoretical rate that neither stimulates nor restrains the economy.
What is Neutral Cash Rate?
The neutral cash rate is the theoretical cash rate level that neither stimulates nor restrains economic activity. The RBA estimates this around 3.0–3.5% currently. Rates above neutral are contractionary; rates below are expansionary.
Why it matters for you
Neutral cash rate gives you a rough anchor for where rates might settle over the long run — useful when deciding whether to fix, split, or stay variable. If the cash rate is currently above neutral, variable-rate loans may be pricing in future cuts.