Darling calls for banks to pass savings to consumers

Since the Bank of England shocked the nation with an unprecedented 1.5 percent cut in interest rates last week, the Chancellor Alistair Darling has told the heads of Barclays, HBOS, Lloyds TSB and HSBC at a meeting on Friday that they must pass on the interest rate cuts to consumers.

Having reduced interest rates to 3 percent, which is the lowest in over 50 years, action has been taken although the interbank lending rate is still tracking at around 4.5 percent.

The Council of Mortgage Lenders have voiced their concern over the fact that banks are being pressured and lobbied to pass on reduced rates because it is unfair to expect an instant cut until the reduced rate brings down the banks own financing costs.

Thus far only Abbey, Bradford & Bingley and Lloyds TSB instantly passed the savings onto their customers and now the others have followed suit following the government intervention.

The shadow Business Secretary, John Thurso has called for Darling to sign an agreement with the banks that the nation has a stake in to specify the need to increase lending to small businesses in order to drive the economy forward.

Prime Minister Gordon Brown has reiterated his stance that the government will go all it can to make banks continue to lend, although the gap between the interest and mortgage rates has not been this large since the Second World War.

Story link: Darling calls for banks to pass savings to consumers