Commonwealth Bank chief executive Ralph Norris says the rising cost of funding will push up interest rates independent of changes to the central bank's cash rate.
"There is no doubt when we look at the current cost of funding that rates are going to increase," Mr Norris told media following a business lunch in Sydney on Thursday.
"As I said in my address today, the additional cost of liquidity and the additional cost of capital is going to have an upward pressure on interest rates going forward.
"Movements in bank funding costs are impacted by more than just the RBA (Reserve Bank of Australia) cash rate." Mr Norris said global pressures on funding costs would persist while market volatility and sovereign debt issues remained.
"Until we see some sort of normality get back into markets, but I don't see that happening quickly.
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"The cost of debt is now significantly impacted by what is now known as the risk premium." Mr Norris said the Commonwealth Bank had a "significant tranche" of funding on its books that continues to roll at a higher cost.
He said the cost of funding from domestic savings had risen 126 basis points since the global financial crisis began in earnest over two years ago. The cost of obtaining offshore funding had risen 140 basis points, he said.
"The crisis really started in earnest two years ago, and we have been funding out to five years," he said.
"There is still a significant tranche of funds on our books to roll at the new higher rates."
The RBA board next meets to decide on interest rates on November 2. The RBA's cash rate stands at 4.5 per cent, having last increased the rate by a quarter of a percentage point in May.
