LONDON (Reuters) - The Bank of England will further increase the size of a cheap credit scheme after banks and other lenders sought to make greater use of it before a deadline at the end of February 2018.
Finance minister Philip Hammond said he had authorized a BoE request for a 25 billion-pound increase in the maximum size of the Term Funding Scheme to 140 billion pounds ($152 billion).
“As the end of the drawdown period approaches, participants have greater certainty over the likely size of their borrowing allowances earned from positive net lending, and we now expect the final level of drawings to exceed 115 billion pounds,” BoE Governor Mark Carney said in a letter to Hammond.
Under the terms of the scheme, banks can borrow from the BoE at a rate close to its benchmark rate, as long as they maintain or expand net lending to businesses and households.
The BoE this month increased Bank Rate for the first time in more than 10 years.
The TFS was launched in August last year as part of a broad stimulus push by the BoE to help the economy cope with the shock of the Brexit referendum decision to leave the European Union. In August this year, the maximum size of the program was increased to 115 billion pounds from 100 billion pounds.
($1 = 0.7551 pounds)
Reporting by William Schomberg, editing by David Milliken, William Maclean