RBA Cash Rate record low


On 4 November 2020, The Reserve Bank of Australia (RBA) reduced the Cash Rate by 15 basis points to a new record low of 0.10%. This reduction is down from the previous record low of 0.25% announced back in March 2020. The RBA also lowered its three-year bond yield target to 0.10% and announced it will buy $100b of Australian government bonds over the next six months. 

Recognising the huge impact of COVID-19, the RBA wants to keep funding costs low across the economy and support the provision of loans (referred to as credit), especially to small and medium-sized businesses. The RBA indicated that it will not increase the Cash Rate until significant progress is made in reducing unemployment and inflation rises sustainably back to target. The RBA does not expect this to be for at least three years.  

While this is supportive for businesses and individuals who borrow money, the flipside is lower or negligible income for savers. The impact of a low cash rate is being seen in the 0.48%^ return for members of the Cbus ‘Cash Savings’ option over the past 12 months, compared to a long-run average return of 2.14%^p.a. over the past 10 years (September 2020, SuperRatings, Cbus – Cash Savings). 

The target portfolios for Cbus' diversified investment options have some exposure to assets such as cash or fixed interest, with the more conservative options having a greater allocation to these assets. For example, the Cbus Conservative option has a strategic asset allocation to cash and fixed interest of 57.5%. Refer to Cbus’ Investment Handbook for more detailed asset allocation data. Given the low interest rate environment, members in these options should expect lower returns over the next few years. Those considering more growth-focused options as an alternative should bear in mind that the possibility of higher returns comes with additional risk.

Cbus’ diversified investment options aim to reduce the impact that any one asset class such as cash or fixed interest can have on total returns by investing across different asset classes. For example, the Growth (Cbus MySuper) option has close to 25% allocated to property and infrastructure assets which provide a source of income along with capital growth. The income from unlisted property and infrastructure is derived from longer-term contracts, so returns from these asset classes are likely to be less negatively affected near-term by cuts in the RBA cash rate. This demonstrates the role of diversification across asset classes to help minimise the impact that one type of investment can have on your retirement savings.

It is important to consider what investment options are right for members, so we encourage getting in touch with Cbus Advice Services on 1300 361 784, available at no additional cost.


Past performance is not a reliable indicator of future performance. 

^The return for the Growth (Cbus MySuper) option is based on the crediting rate, which is returns minus investment fees, taxes and until 31 January 2020, the percentage-based administration fee. Excludes fees and costs that are deducted directly from members account. This information is about Cbus. It doesn’t take into account your specific needs, so you should look at your own financial position, objectives and requirements before making any financial decisions.