Bank chief: We may not pass on full rate cut

By James Tapsfield, PA

Monday, 3 November 2008

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A senior executive at one of Britain's biggest high street banks warned today that it may not pass on the full effect of an interest rate cut to customers.

David Hodgkinson, chief operating officer at HSBC, said there could be some "stickiness" even if the Bank of England reduced rates as expected on Thursday.

Mr Hodgkinson, who is part of a business delegation accompanying Prime Minister Gordon Brown on a tour of the Gulf, told Bloomberg News credit had been "mispriced" over recent years.

He added: "As an adjustment process that is taking place, clearly if interest rates are down significantly the rates for borrowing will go down but I am not going to say it is absolutely linear, because it depends on the particular (situation) and the risk."

Asked if that meant there would be "stickiness" in rates, Mr Hodgkinson replied: "Yes."

Will UK inflation hit 6% this year?

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