The cash rate is the rate at which banks lend to each other overnight. The RBA's Monetary Policy Board sets a target for it eight times a year and uses its market operations to keep the actual rate there.
Changes flow through quickly to variable mortgage rates, deposit rates and business loans, and over time to fixed rates and bond yields.
Why it matters
Raising the cash rate makes borrowing dearer and saving more rewarding, which cools spending, hiring and eventually inflation. Cutting it does the reverse. Because so many Australian mortgages are variable, the cash rate reaches household budgets faster here than in most countries.
Higher Australian rates relative to other countries also tend to support the Australian dollar, as investors are paid more to hold Australian assets.
See the data: RBA cash rate target.
General information, not advice.