Economists react to bank funding programme

Nick Tuffley

The Reserve Bank has kept the official cash rate on hold at 0.25%, but outlined details of its Funding for Lending Programme, which will kick off next month.

The FLP will give banks access to cheaper funding and in turn reduce borrowing costs for individuals and businesses. 

The programme will be set at the rate of the OCR, with the size of the programme set at 4% of each participant's total loans and advances.

A conditional additional allocation of 2% of eligible loans will then be made available, for a total size of 6% of eligible loans, the central bank said.