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Bank of England Governor Warns of Deposit Charges

Fri, 27 Mar 2009

The Governor of the Bank of England has warned that banks may start charging customers for holding deposits as interest rates continue to fall. With banks' profit margins afflicted by the recent interest rate cuts, Mervyn King said he expected banks to find new ways to maintain profits. Such a measure would penalise those seeking mortgage or remortgage deals, but may enable banks to begin to ease the plight of those with savings accounts .

Mr King told the House of Commons Treasury Committee, 'Banks will want to raise the question of charging customers if interest rates are on such a low level. Once we are through the immediate problem, there will be a need to increase the national savings rates. Biggest concern I have is the state of the world economy.it is the biggest downside risk facing us in the coming years. It is most important we stick to close target. That is the anchor everyone must hold on to. We are trying to bring the future outlook back up to target. We have no interest in seeing interest rising above that. In six months' time we will be able to look back and see. impact of initial quantitative easing operations. We would aim to do £75 billion in three months. We might need to do less if it works.'
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