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Alistair Darling today insisted it was "essential" that banks pass on today's 1.5% interest rate cut to customers, but Downing Street declined to say if it could force banks to do so.
Gordon Brown's official spokesman said the public would "expect" banks to take action.
But he added: "We are not going to make specific comments about the specific pricing of individual mortgage products in every single bank.
"But we are clear that consumers should see the benefit of reduced interest rates.
"The prime minister supports the view that banks should pass on the cut. I think the public expects that, when there is an interest rate cut of this magnitude, they should see the benefit.
"Banks are commercial organisations, but the government has taken significant action to ensure that banks' customers can benefit from lending decisions and lower interest rates from banks, and we would expect banks to now play their part to ensure customers do receive some benefit."
Asked directly whether the prime minister supported MPs' calls for the cut to be passed on, the spokesman replied: "Yes."
He said banks that accepted financial support from the government did so on the condition that they made lending available at competitive rates.
"The banks themselves have made commitments that we expect them to honour and we continue to monitor the situation," he said.
The chancellor added his voice to calls for the rate cut to be passed on. Continued uncertainty in the months ahead meant everyone had to "play their part", he said.
"I think it's essential that the banks do pass on the benefit of lower interest rates to people and to businesses," he said.
"At this time, people are feeling pressed with their mortgages and businesses need as much help as they can get."
Asked about the potential for further interest rate cuts, perhaps to as low as 1%, the chancellor said it was a matter for the independent Bank of England.
"They've got to target inflation but they've also got a duty to support our objectives in supporting the wider economy.
"But I think we need to do whatever is necessary in support of the economy and I've made it clear that the government should, at this time, support the economy as well as making sure that we live within our means in the medium term."
- Economic policy
- Alistair Darling
- Gordon Brown
- Banking sector
- Interest rates
- Interest rates
- Mortgages
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