The FLP is designed to provide domestic banks with an additional source of wholesale funding at interest rates commensurate with achieving our monetary policy mandate. Lower bank funding costs should embed the retail borrowing and lending costs we need to be successful. Our communication challenge remains ongoing despite the successful implementation of these new monetary policy tools.
We share this challenge with other central banks.9 The impact of the LSAP and FLP on the government’s balance sheet differ to that of moving the OCR up and down to implement monetary policy.