The SMH reported yesterday that funding costs are rising for Australia’s banks, which could preclude them from passing on any cuts to official interest rates by the RBA:
While the ructions in world financial markets are increasing the odds of a central bank interest-rate reduction, they’re also pushing up the price of wholesale funding for the country’s biggest lenders. Commonwealth Bank of Australia last week sold five-year Australian dollar bonds at a yield of 115 basis points over the swap rate. That compares with a spread of 80 for similar paper from National Australia Bank and Australia & New Zealand Banking Group in May.
