British Chancellor of the Exchequer Jeremy Hunt Calls for Speedier Interest Rate Transmission to Savers
London – Jeremy Hunt, Britain’s finance minister, expressed concerns on Monday about the slow pace at which banks are passing on increases in central bank interest rates to savers. While these increases are promptly reflected in mortgage rates, savers are left waiting for higher returns. Hunt, who recently met with bank executives, strongly raised the issue of delayed rate transmissions. He emphasized the urgent need for a resolution and stated that he is actively working on finding a solution.
Historically, banks have benefitted from increased interest rates as it improves their net interest income. This income is derived from the difference between borrowing costs and the amount paid out in interest on deposits. However, the Treasury Select Committee of the Parliament pointed out earlier this month that British banks have been slow to raise rates on easy access savings accounts compared to the base rate set by the Bank of England.
The committee highlighted that the four largest banks in Britain – Lloyds, NatWest, HSBC, and Barclays – offer rates of 0.7-1.35 percent for easy access savings accounts while the central bank has raised the base rate to 4.5 percent. Instant access accounts, where approximately 60 percent of household deposits are held, are especially affected by this disparity.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
