Alex Moffatt from Joseph Palmer & Sons (VIC) shares his latest update “The Reserve Bank is expected to maintain the interbank rate at 1.5% today. The interbank rate is just that, the rate at which the commercial banks deal exchange settlement funds between themselves and so it has little bearing on real funding costs. Take a look at the sharp upward movement in the 90 day bank bill rate.

Many commercial funding facilities are based on a margin above this rate and so the effects flow on to the broader economy. The regional banks are already nudging their lending rates higher and we expect the big four to follow suit.” For more information, please visit the Joseph Palmer & Sons website here.