Funding for lending programme
The Funding for lending programme (FLP) is one of the tools we are using to maintain low and stable inflation and support full employment. It works by lowering interest rates and encouraging households and businesses to spend and invest.
The programme allows eligible banks to borrow directly from us at the Official Cash Rate (OCR), which is currently 0.25 percent. The borrowing rate will adjust over the term of the transaction if the OCR changes, whether up or down.
As banks will be less reliant on more expensive deposits and wholesale borrowing, the programme lowers their overall funding costs. Banks can then pass these reductions on to their customers through lower mortgage and business lending rates.
The programme starts on 7 December and runs until 6 June 2022 for the initial allocations, and until 6 December 2022 for the additional allocations.