Why is it that when the Bank of England's interest rates go down banks put theirs up?

Question

Why is it that when the Bank of England's interest rates go down banks put theirs up?

Answer 1

Well on the news it will be because of oil prices and the economy and credit crunch over here and in the US, but my theory is that they are all a bunch of money grabbing (word that rhymes with bankers).

Answer 2

The bank of England ease interest rate to regulate the inflationary concerns in the economy. This should cause the value of the pound to drop and make exports of goods cheaper. And help in the balance of payment. It may make inter banks and banks borrowing with it cheaper but banks may still need to increase its interest rates to its customers due inflationary and management costs needed to maintain its existing  lending to customers and its banking business.