Banks have ‘questions to answer over interest rate rises for savers’

Banks have questions to answer about how quickly interest rate rises are being passed to savers, a Cabinet minister has said.

Work and Pensions Secretary Mel Stride acknowledged there are “questions to be asked” after months of the Bank of England steadily increasing interest rates in a bid to tackle inflation.

The Bank last week raised interest rates from 4.5% to 5%, triggering fresh misery for struggling mortgage holders.

But questions have also been asked about the limited benefits that have accrued for savers.

Speaking to LBC, Mr Stride said: “There’s certainly a question to be asked about the speed at which banks pass on the benefits of these interest rates. That’s a way of saying it’s definitely something to be looking at.

The former Commons Treasury Committee chairman said: “The Chancellor (Jeremy Hunt) has had the banks in for some very serious conversations about this. The Financial Conduct Authority… also oversees that sector and is looking at exactly those kinds of issues.

“So it is something that’s right up there on the Treasury’s agenda at the moment.

“I think the general feeling is that there is a question mark hanging over whether they are passing on these benefits to savers quickly enough.

“And what I’m reassuring your listeners of is that we are absolutely looking at that.”

Mr Hunt on Monday said he was working to ensure banks move quicker on the issue after a meeting with lenders last week.

Mr Stride also expressed sympathy for Bank of England governor Andrew Bailey, who has been under fire in recent days over the failure to bring down stubbornly high inflation.

He also suggested the Bank may have moved too slowly on inflation.

“I have great sympathy with Andrew Bailey,” he said.

“The biggest challenge that the bank has found is uncertainty.”

But he told the programme: “History might judge, and perhaps is not for me on your radio show to speculate on this, but history might judge that they could have moved a bit earlier.

“But let’s see – I think the jury is a little bit out.”