Banks Offer Higher Rates on Deposits as BOE Drains Liquidity

UK banks are offering unusually high interest rates to clients in order to attract cash, the latest sign of how the Bank of England's balance-sheet reduction is shrinking liquidity in the system.
The rate offered by banks most keen to attract overnight deposits has aligned with the BOE's key rate for the first time since May 2020, excluding a brief up-tick over year-end, according to Sterling Overnight Index Average (SONIA) data published Friday. The reading represents the amount banks pay to borrow sterling from other financial institutions.

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