International funding costs soar

International funding costs for Australian banks have risen again as a result of renewed fears over the European debt crisis.

The interest rates on five-year bonds increased for the big four banks by as much as 7% this week alone, according to a report in The Australian.

It could mean an increase in variable mortgage rates, regardless of the Reserve Bank of Australia’s monthly decisions on the cash rate.

Fears were reignited this week as the Spanish and Italian governments battled higher bond-yields and investors shunned lending money to the indebted nations.

The slowing of Australian retailing, construction and manufacturing sectors have led to calls from business and union leaders, including billionaire retailer Solomon Lew and union heavyweight Paul Howes, for the RBA to cut the official interest rate.

More than 15,000 new full-time and 28,000 part-time jobs were added to the Australian economy in March, according to the ABS.

Germany has the second-largest manufacturing export economy in the world, despite a very strong currency.

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