raised its base rate to a 15 year high of 5% last month, in an effort to tackle inflation. the news comes as the bosses of the four big high street banks have been summoned to meet the uk s financial watchdog later this week, to discuss concerns the banks are profiteering by not passing in the higher rates to savers. our economics correspondent andy verity is here. andy. thanks, jane. well, it s all about trying to tame inflation the annual rise in the prices of all the goods and services we typically buy from hair cuts to ham sandwiches. at the last count inflation in europe had slowed down sharply to 5.5%. in the us it was 4.0%. but in the uk, 8.7%. economists think that s because households and firms are spending too much, so you ve got too much money chasing too few goods, and that pushes prices up. if you raise interest rates, you make it more expensive for everyone to borrow, so households and firms
won t spend quite as much. but higher rates hit some harder than others, especially younger families who have stretched to buy a home with a big mortgage in the past five years. before inflation took off you could get a five year deal that fixes your interest rate at about 2.5%. now look at how this blue line s shot up. if you want to fix your rates over five years it s more than 6%. the winners from higher rates should be savers, mostly older people, but look at this blue line savings rates. the gap between the two mortgage rates and savings rates was just over 2% before rates started rising. now it s more like 3.5%. much bigger now. so who s the winner there? not savers but banks shareholders. that gap is banks main source of profit. now here s what the uk s big five banks profits were for 2022 £37 billion. they re likely to be even larger in 2023 because that gap between savings and borrowing rates has grown. who s not making bigger profits?
today at one: the united nations says it s alarmed by the scale of israel s operation in the occupied west bank. 3,000 people are said to have fled their homes in thejenin refugee camp and ten people have been killed. a bbc investigation find that of 500 allegations of police officers abusing their position for sexual gain over five years, only 2a men have been charged. a man who killed a woman and her two daughters by setting herflat on fire in a dispute about rubbish is found guilty of murder. the big high street banks are called in by the financial watchdog to discuss claims they re failing to pass on higher interest rates to savers. and can he turn back time?
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U.S. inflates more slowly, China deflates, American earnings still strong, Canadian pipelines deliver as expected, Algonquin breaks up with Kentucky Power.