The big four's risky rates play

Australian banks will be tempted to cut deposit rates in order to recover lost margin from mortgages, but it's a dangerous game to play as wholesale funding markets seize up.

The next round of the European crisis will involve banks. In Australia, suddenly what banks pay for deposits will become a major issue. Having been forced to cut their mortgage interests rates, the Australian banks will be tempted to recover that money via lower term deposits and other deposit rates – in other words, to take the money from retirees.

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