22 Mar

Is there a connection between the interest rates banks set and the Bank of England’s interest rate?

Author: admin  |  Category: Interest Rates

Is there a connection between the interest rates banks set and the Bank of England’s interest rate? Does the Bank of England control the retail bank’s interest rates? Or do the banks set them independently of the Bank of England?

There is a conection between the two. When the BOE increases the rate this increases the rate that the retail banks have to pay back to the BOE. The retail banks naturally pass this on to their customers.


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2 Responses to “Is there a connection between the interest rates banks set and the Bank of England’s interest rate?”

  1. ROBERT A Says:
    March 23rd, 2010 at 3:49 am

    There is a conection between the two. When the BOE increases the rate this increases the rate that the retail banks have to pay back to the BOE. The retail banks naturally pass this on to their customers.
    References :

  2. Cyfran Says:
    March 23rd, 2010 at 4:05 am

    The BoE is connected to all banks in the money markets but does not control their interest rates directly.

    The last interest change by the BoE was a 0.25% decrease but Egg the online bank decreased by 0.5% all savings accounts to make more money from their savers.

    Most banks will follow the BoE lead but their may be a delay in doing so or larger cuts or smaller increases to increase their profits.

    In Amercia their central banks cut drastically but very few banks followed their lead at all!
    References :

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