(Feb 24): The prospect that interest rate increases by the US Federal Reserve will drive up bank funding costs looms particularly large about 15,000 kilometers away in Australia. The four biggest banks there have historically gotten a bigger proportion of their funding from wholesale debt investors than peers in Europe and Japan, and the majority of that is sourced outside the local Aussie market. One way lenders could deal with higher funding costs is to pass it on to the nation’s US$1.2 trillion mortgage holders, increasing expenses for borrowers in a heated property market. Fed funds futures contracts on Friday point to 38% odds of a rate increase next month. “A strong, well functioning US economy is going to be very important for us,” he said.

Source: The Edge Markets February 24, 2017 15:00 UTC