12 July 2012 7:00am

Cash rates in Australia are 1.5 percentage points lower than they might otherwise be because of the elevated cost of funds faced by banks, Phillip Lowe, the deputy governor of the Reserve Bank of Australia, told a conference yesterday.

While Lowe's point is not new, the RBA has not made it so plainly before.

Speaking at the conference of the Australian Conference of Economists, held in Melbourne, Lowe walked listeners through some pricing trends in interest rates on assets and liabilities since the credit crisis took hold in 2007.

"What we are seeing as a result of both...