Labour: Force banks to pass on interest rate hikes to savings accounts
Labour has called on the government to ensure that banks are passing on higher interest rates to savers in an attempt to cool inflation.
Speaking on the Sophy Ridge show on Sky News, Lisa Nandy said: “What we are proposing is that the Government ensures that those (interest rate) rises are passed on so that it’s more attractive for people to put money into savings in order to help cool the economy.”
The shadow communities secretary argued that this would help bring inflation down because people would be more likely to save money rather than spend it.
“If you make it more attractive for people to save, then it does have a significant effect in cooling inflation,” she said.
“There are good reasons why the Government ought to be intervening to ensure that banks pass on those interest rate rises to savers as well. And we are asking the Government to do that today.”
Banks have been under significant pressure from politicians and regulators for not passing on the interest rate hikes to savers while lifting mortgage rates significantly.
Last week, the Bank of England hiked interest rates to five per cent. However, the average rate available at the end of last week on an easy access savings account was 2.35 per cent, according to Moneyfacts.
In contrast, the average rate on a two-year fixed deal was 6.19 per cent while the average rate on a five-year deal was 5.83 per cent.
Nandy noted “it can’t be right the banks are passing on interest rate rises to mortgage payers, and not to savers.”
The influential Treasury Select Committee has repeatedly criticised the “measly” rates on offer, demanding that banks “up their game”.
The banks argue that there are a range of deals available to customers, particularly if they are willing to lock away funds for a fixed length of time.