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Go on, drop that interest

Go on, drop that interest

Although the Bank of England cut interest rates by 1.5 percent last week, some banks took time to comply. Here’s what happened.

November 9, 2008 3:27 by

Last week, the Bank of England (BoE) announced a 1.5 percent interest rate cut, which brought the national interest rate to 3.0, a 54-year low. The last time the BoE dropped its rate this dramatically was during the 1981 recession.
While homeowners with mortgages in England are rejoicing, some banks have refused to implement the cuts fully. HSBC, which is one of the few banks that has not asked its government for a bailout, has said that it will not abide by the BoE’s decision. David Hodgkinson, CEO of HSBC said: “We will do our best but I will not give a categorical commitment that they [HSBC interest rates] will come down,” quoted in The Times.
He also stated that until LIBOR interbank lending rates come down, it is unlikely that HSBC will implement the BoE’s full rate cut.
Unfortunately, HSBC is not alone. Other banks, including Barclay’s, have refused to comply completely with the BoE’s 1.5 percentage cut. Understandably, this has caused an angry backlash from the media and customers.

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