How it works
The FLP 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). 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.
How long it will run
The programme started on 7 December 2020 and will run until 6 June 2022 for the initial allocations, and until 6 December 2022 for the additional allocations.
More information
The total volume of funds lent under the FLP is published on the influences on settlement cash and standing facilities statistic pages: