We\’re ruled by cretins.
Alistair Darling summoned the chief executives of Britain’s biggest banks to Downing Street early this morning to demand they pass on the Bank of England’s interest rate cut to their customers.
Treasury sources confirmed to Times Online that the Chancellor told the heads of all Britain’s major high street lenders – including HSBC, Barclays, LloydsTSB, HBOS and Abbey – to implement rate cuts immediately.
Yesterday the Bank of England slashed interest rates by 1.5 per cent to 3 per cent, their lowest level in 53 years.
But banks have dragged their heels in passing on the rate cut, arguing LIBOR, the overnight inter-bank rate at which they lend to each other, has remained stubbornly high despite official reductions in the base rate.
LIBOR is the rate which determines the price at which banks can borrow. It is thus the rate which determines the rate at which they can lend (with, of course, a mark up for costs and risk). The base rate influences LIBOR, of course, but it doesn\’t determine it.