The upward pressure on short term interest rates hasn’t eased, bringing closer the time when major lenders, including the big five banks, will be forced to push up mortgage and other rates without a move by the Reserve Bank.

No matter what the Reserve Bank tries to do, major financial institutions, including our biggest banks, remain cautious about lending to each other. Short term interest rates continued to rise this morning, inching further above 7% as conditions remained tight.

Yields on 30 day bills rose to 7.03%; 90 day bills, 7.08% and 180 day bills hit 7.11%, the highest since midway through 1996 — more than cancelling out last Thursday’s fall from 7.07% to 6.91% for 180 day bills.

The rises came as there was a slight easing in similar rates on the London Interbank Offered Rate for lending in US dollars and euros. It was the first time overnight and three month rates had fallen for several weeks.