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05/12/2008
Prime Minister Urges Banks To Pass Rate Cut On
Gordon Brown has urged banks to pass on the latest interest rate cuts, so customers can feel the full benefits of the 1% reduction.
The cost of borrowing was cut by one percentage point, yesterday, pushing the base rate of interest to 2% - the lowest level since September 1939.
The Bank of England made the move, which is sure to be welcomed by commentators, who believe the cut could help the country in the face of recession.
The Bank's Monetary Policy Committee (MPC) made the announcement at midday on Thursday, which follows last month's shock 1.5% cut - the biggest in nearly 30 years.
Some of the UK's major lenders made an immediate decision to pass on the full cut to customers with a variable-rate mortgage.
Nationwide, Lloyds TSB, Barclays' lending arm the Woolwich and Bristol & West all said they would be reducing their standard variable rate (SVR) by at least the full 1%.
However, Britain's biggest lender, Halifax Bank of Scotland (HBOS) announced it would only be passing on 0.25 of a percentage point.
Gordon Brown said he would talk to banks to try and persuade them to cut the cost of brrowing. He also said he would take unspecified steps to reduce the London Interbank Offered Rate (Libor), the level at which banks lend money to each other.
Speaking today to GMTV, the Prime Minister said "We are taking action to try and get that (Libor) down. Banks should really pass on the interest rate cuts.
"Remember the last time interest rates came down 1.5 percent, we had to talk to the banks before things moved forward. But things did move forward and we will be talking to the banks again."
Chancellor Alistair Darling also appealed for banks to pass on the new rates, saying: "banks must treat their customers fairly".
He added: "In the same way that banks expect their customers to stick to their side of the deal, customers should be able to expect that banks will stick to theirs."
(JM)
The cost of borrowing was cut by one percentage point, yesterday, pushing the base rate of interest to 2% - the lowest level since September 1939.
The Bank of England made the move, which is sure to be welcomed by commentators, who believe the cut could help the country in the face of recession.
The Bank's Monetary Policy Committee (MPC) made the announcement at midday on Thursday, which follows last month's shock 1.5% cut - the biggest in nearly 30 years.
Some of the UK's major lenders made an immediate decision to pass on the full cut to customers with a variable-rate mortgage.
Nationwide, Lloyds TSB, Barclays' lending arm the Woolwich and Bristol & West all said they would be reducing their standard variable rate (SVR) by at least the full 1%.
However, Britain's biggest lender, Halifax Bank of Scotland (HBOS) announced it would only be passing on 0.25 of a percentage point.
Gordon Brown said he would talk to banks to try and persuade them to cut the cost of brrowing. He also said he would take unspecified steps to reduce the London Interbank Offered Rate (Libor), the level at which banks lend money to each other.
Speaking today to GMTV, the Prime Minister said "We are taking action to try and get that (Libor) down. Banks should really pass on the interest rate cuts.
"Remember the last time interest rates came down 1.5 percent, we had to talk to the banks before things moved forward. But things did move forward and we will be talking to the banks again."
Chancellor Alistair Darling also appealed for banks to pass on the new rates, saying: "banks must treat their customers fairly".
He added: "In the same way that banks expect their customers to stick to their side of the deal, customers should be able to expect that banks will stick to theirs."
(JM)
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