RBA calls big banks' bluff on funding costs

The central bank this week confirmed suspicions that the big four are using margins as a lever to maintain profitability, writes Eric Johnston.

Is the Reserve Bank ever-so-gently putting pressure on the big banks to revisit their mortgage rates? A string of speeches by top RBA officials in recent weeks as well as several reports have put the focus on the other side of the long-running and dogged debate about commercial banks, funding costs and mortgage rates.
The big four banks pushed through as much as 15 basis points in interest rate rises on mortgages this month, even as the Reserve kept cash rates on hold. They argued the move was necessary, given the sharp run-up in funding costs following Europe's debt problems.
The focus will again switch to how the banks will respond to the RBA's regular board meeting next week.