How RBA Cash Rate Probabilities Are Calculated

RBA Watch derives market-implied probabilities of RBA cash rate decisions directly from ASX 30-day interbank cash rate futures contracts. These contracts are traded daily on the Australian Securities Exchange and reflect the collective expectation of professional market participants — banks, hedge funds, and institutional investors — about where the overnight cash rate will be at each future RBA board meeting.

Unlike opinion polls or economic forecasts, futures prices are backed by real money. Traders take on financial risk to express their views, which means the prices continuously incorporate the latest economic data, central bank communications, and global events in near-real-time. This makes ASX interbank futures one of the most reliable, objective signals available for tracking RBA rate expectations.

Data Source

ASX Futures

30-day interbank cash rate

Update Frequency

Daily

After ASX close (~4 PM AEST)

Increment Size

25 bps

Standard RBA move size

Current Rate

4.35%

As of August 2026

What Are ASX 30-Day Interbank Cash Rate Futures?

The ASX operates two closely related short-term interest rate futures markets: the 90-day bank bill futures and the 30-day interbank cash rate futures. For the purpose of RBA rate tracking, the 30-day interbank contracts are the preferred instrument because they are settled against the average of the actual RBA overnight cash rate — the very rate the RBA sets at each board meeting.

Each 30-day interbank futures contract covers a specific calendar month. The contract is quoted as 100 minus the expected interest rate for that month. So if the market expects the cash rate to average 4.60% during October, the October futures contract trades at approximately 95.40 (100 − 4.60 = 95.40).

Settlement is based on the arithmetic average of the daily RBA overnight cash rate target published by the Reserve Bank throughout the contract month. This direct linkage to the official policy rate — not to bank lending rates or BBSW — makes the 30-day interbank contract uniquely useful for extracting RBA meeting probabilities.

Contracts are available for several months forward, with the most actively traded covering the next two to four RBA meetings. Further-dated contracts tend to have lower liquidity and wider bid-ask spreads, which is why probability estimates become less precise for meetings that are many months away.

Why not use the 90-day bank bill futures? The 90-day contracts are more liquid but cover a three-month window, making it harder to isolate the effect of a single RBA meeting. The 30-day contracts map more cleanly onto individual monthly decisions.

How We Derive Cut / Hold / Hike Probabilities

The core of our methodology involves three steps: extracting the implied rate from the futures price, comparing it to the current cash rate, and then attributing probability to each possible outcome.

This is the same method published by the ASX RBA Rate Tracker. ASX expresses it as a single probability equation that weights the contract month by the days before and after the board meeting:

rt · nb + { r(t+1) · p + rt · (1 − p) } · na = X

Here X is the futures-implied yield (100 − price) for the meeting’s month, r_t is the current cash rate, r_(t+1) the rate after a 25 bp move, p the probability of that move, and n_b / n_a the fraction of the month before / after the meeting. Solving for p gives the market-implied probability of a change — our published figures track ASX’s implied-yield curve to within about one basis point.

As ASX notes, the calculation also accounts for any difference between the overnight cash rate and the target cash rate. Historically these have been the same, so this adjustment is typically zero.

Step 1 — Extract the implied rate. We convert the futures price back to an interest rate using the standard formula:

# Futures price → implied rate implied_rate = 100 − futures_price # Example: futures contract at 95.63 implied_rate = 100 − 95.63 = 4.37%

Step 2 — Identify the possible outcomes. The RBA typically moves rates in 25 basis point (0.25%) increments, though 50bp and larger moves have occurred. We model three standard outcomes relative to the current cash rate:

Cut: Cash rate decreases by 25 bps (e.g., 4.35% → 4.10%)
Hold: Cash rate stays unchanged (e.g., 4.35% → 4.35%)
Hike: Cash rate increases by 25 bps (e.g., 4.35% → 4.60%)

Step 3 — Assign probabilities using linear interpolation. If the implied rate sits between two possible outcomes, we split the probability proportionally. The formula varies depending on whether the implied rate falls between a cut and hold, or a hold and hike:

# When implied_rate is between hold_rate and hike_rate: p_hike = (implied_rate − hold_rate) / (hike_rate − hold_rate) × 100 p_hold = 100 − p_hike p_cut = 0 # When implied_rate is between cut_rate and hold_rate: p_cut = (hold_rate − implied_rate) / (hold_rate − cut_rate) × 100 p_hold = 100 − p_cut p_hike = 0 # Concrete example (current August 2026 meeting): # current_rate = 4.35%, implied_rate = 4.37% # hold_rate = 4.35%, hike_rate = 4.60% p_hike = (4.37 − 4.35) / (4.60 − 4.35) × 100 = 8.0%

The intuition is simple: if the market fully expected a hold, the implied rate would equal the current rate exactly. Any deviation above the current rate is partially priced as a hike probability; any deviation below is partially priced as a cut probability. The 25bp increment defines the full range over which this interpolation runs.

This approach is standard practice among professional rate strategists and is consistent with how JPMorgan, Goldman Sachs, and Westpac publish their own market-implied rate probability tables. The key assumption is that the RBA will move in 25bp steps — if a non-standard move is considered possible (e.g., 50bp), the probability estimates would need adjustment.

Why not a multi-meeting chain approach? Some providers use a "bootstrapping" method that chains expectations across meetings. We apply the simpler single-contract method for transparency and interpretability. For short horizons (next 1-3 meetings), both approaches yield nearly identical results. For meetings 6+ months out, the chaining method can produce tighter estimates but requires more assumptions.

Data Source & Update Frequency

All probability estimates are derived from end-of-day futures settlement prices published by ASX. Our pipeline runs each weekday evening after ASX market close — typically by 5:00 PM AEST — and updates the site automatically.

On days when ASX is closed (weekends and Australian public holidays), the data is not refreshed. The site will show the most recent trading session's prices along with a "stale data" indicator if more than one business day has passed since the last update. This is normal and expected — futures prices don't change on non-trading days.

The pipeline cross-references the published RBA monetary policy meeting calendar to identify which futures contract month corresponds to each upcoming RBA board meeting. For a given meeting, we use the futures contract that most cleanly covers the meeting date.

The current cash rate used as the baseline for probability calculations is updated automatically whenever the RBA makes a rate announcement. We cross-reference this against the official RBA cash rate target series.

Limitations

Futures markets are the best real-time signal available, but they are not infallible. Understanding their limitations is important context for any investor or analyst using this tool.

Markets can be wrong. The implied probabilities represent the consensus of active traders at a given moment, not a guaranteed forecast. Unexpected events — a surprise inflation print, a global financial shock, or a significant shift in RBA rhetoric — can cause rapid repricing. Markets have historically underestimated the magnitude of rate cycles at both turning points.

Liquidity varies by maturity. The nearest one or two contracts (covering the next 1-2 RBA meetings) are typically well-traded with tight spreads, making the implied probabilities highly reliable. Contracts covering meetings 4+ months away may have lower open interest and wider bid-ask spreads. This means a single large trade can move the implied rate in thinly traded contracts, causing temporary distortions. We flag lower-confidence estimates where liquidity is reduced.

The 25bp assumption. Our model assumes the RBA moves in 25bp increments. This is historically accurate for the vast majority of decisions. However, the RBA has made non-standard moves: 50bp hikes in 2022, a 15bp cut in November 2020 (to 0.10%), and the 100bp emergency cuts in 2008. If markets are pricing in a larger move, our single-step model will understate that probability.

Timing within the month. The 30-day contracts cover the full calendar month. If the RBA meeting falls early in the month, the implied rate reflects an average of pre- and post-meeting days, which can slightly dampen the probability signals. We day-weight the calculation to account for this. For meetings that fall very late in a month (leaving only a day or two afterwards), we instead read the implied rate from the next meeting-free month’s contract, which avoids the numerical instability that pure day-weighting would introduce.

⚠️ Not financial advice. RBA Watch is an educational and informational tool. Nothing on this site constitutes financial advice, investment recommendations, or any form of professional advice. Always consult a licensed financial adviser before making investment or borrowing decisions.

About RBA Watch

RBA Watch is an independent, free tool built to make professional-grade interest rate market data accessible to everyone — not just traders with Bloomberg terminals. The cash rate affects every Australian with a mortgage, a savings account, or a business loan, yet the data that professional investors use to track rate expectations has historically been opaque or paywalled.

Our audience includes:

Mortgage holders — particularly those on variable rate home loans who want to understand the probability of their repayments changing
Retail investors — tracking interest rate risk in equities, REITs, and fixed income portfolios
Business owners — anticipating borrowing cost changes for cash flow planning
Financial journalists and analysts — who need a quick, reliable source for market-implied probabilities
Students and curious readers — learning how monetary policy and financial markets interact

The tool is updated automatically each business day. We are not affiliated with the Reserve Bank of Australia, ASX, or any financial institution. All data is sourced from publicly available ASX market data.

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