The RBA has held the cash rate target at 3.6%.

Here’s what you need to do: panic, cancel all plans, sell your house, and leave the country.

Not really – all you need to do is read this newsletter, where I’ll unpack the decision.

Then, I’ll explain the history of Australia’s crypto regulations. More interesting than it sounds, I promise.

Let’s get into it!

Yesterday, the RBA announced it is holding the cash rate steady, at 3.6%.

It’s the RBA’s third decision in a row to leave the rate the same, following a series of cuts.

Here’s what you need to know.

The RBA is Australia’s central bank. It has two goals: 

The RBA board uses the cash rate – what it charges banks for short-term loans – as a tool to achieve these goals.

We usually refer to changes in the cash rate as the RBA changing interest rates, because it affects rates across the economy, including home loans. 

The higher the interest rate, the more expensive it is to borrow money.

The RBA board forecasts where they think inflation and employment are headed, and sets the cash rate to make sure they head towards their goals.

Since the last RBA meeting in October, ABS data shows inflation and unemployment have risen. 

The RBA noted ‘trimmed mean’ inflation was at 3% in September — higher than it had predicted it would be, and at the top of its target band (2-3%). 

The trimmed mean is often seen as a more accurate picture of how inflation is tracking. This is because it excludes volatile prices, such as petrol, to better understand longer-term changes in prices.

Last month, the unemployment rate – the percentage of people who looked for work and couldn’t find any – reached a four-year high. 

The RBA noted this milestone, adding that “job vacancies are still at a high level” and many companies “are experiencing difficulty sourcing labour.”

Here’s the challenge: high inflation generally means increasing the cash rate, but high unemployment generally means decreasing the cash rate. What do you do when you have two different data points telling you to do opposite things? You balance the objectives against each other, and keep things steady. 

Given both increases, the RBA said the board had decided “it was appropriate to remain cautious” in its decision-making. 

It voted unanimously to keep the cash rate on hold.

The RBA meets again in early-mid December. What they do in December depends on three things: what happens to inflation, what happens to unemployment, and what happens to the RBA’s forecast on inflation and unemployment. 

Yesterday, the RBA published its latest Statement on Monetary Policy, which contains the latest forecasts. I’ll break that down for you soon. 

Last week, the Australian Securities and Investments Commission (ASIC) updated its guidance on how existing laws apply to crypto companies. 

Before we get into the new rules, I’ll put them in context. 

In 2008, a person or people under the name Satoshi Nakamoto published a ‘white paper’ outlining the idea for an “electronic cash” system (cryptocurrency) that worked outside of banks, called Bitcoin. 

The central idea behind Bitcoin was the ability to make payments without going through traditional banking channels. The digital currency runs via the ‘blockchain’, where all transactions are verified and connected in sequence. 

Back then, people were mostly buying Bitcoin by trading directly with each other. They met online and traded Bitcoin for cash. Bitcoin was effectively the only available cryptocurrency. 

Then, a few trading platforms emerged, where buyers and sellers could meet, and their payments could be processed. The company running the platform would send your money to the seller, and send the Bitcoin to you. 

In mid-2015, more cryptocurrencies start to emerge, like Ethereum. Now, when you went to a trading platform, you could buy several different coins. 

Around 2017, cryptocurrencies went mainstream. People started to purchase non-trivial amounts of cryptocurrencies hoping to make some money. This caught the attention of ASIC, Australia’s investment regulator. 

It issued its first guidance on how existing laws applied to cryptocurrencies. At the time, it said it would effectively regulate some cryptocurrency sales like selling shares. That is, if a cryptocurrency was being sold with the promise of financial gain, it fell under those existing regulations. 

This advice mostly applied to those companies making the coins, but in principle it also applied to trading platforms if they were encouraging people to buy crypto to make money. 

Between 2017 and 2025, ASIC updated its advice in several stages: 

This brings us to last week’s guidance from ASIC. It made two points:

The new rules and ASIC’s new advice basically brings an end to the wild west of crypto in Australia. 

ASIC Commissioner Alan Kirkland said the changes “ensure consumers receive the full suite of protections under the law and allows ASIC to act when poor practices lead to harm.”

Effectively, they are now regulated like other investment opportunities, like stocks.

In economics, there’s a theoretical concept called purchasing power parity (PPP). Under that concept, you can figure out how much your money would buy overseas by comparing the price of different items. 

We can test PPP by looking at the cost of a Big Mac in Australia in AUD, transfer it into USD, and then compare that to the cost of a Big Mac in the U.S. 

If it’s cheaper in Australia, that means the AUD is undervalued. 

Using that theory, earlier this year, The Economist determined that the AUD is about 13% undervalued based on the price of Big Macs.