Sterling Money Market Operations
Standing Facilities
Together with the remuneration of reserves, reserve averaging and the reserve range, the terms of the Bank's overnight standing facilities on the final day of the maintenance period form the core of the rate-setting part of the Bank's operational framework.
On the final day of the maintenance period, the rate on the standing deposit facility is 25bp below the Bank's official rate and the rate on the standing lending facility is 25bp above it.
Interest rates on standing facilities during the rest of the maintenance period are not performing a rate-setting function in the same way, instead they set limits to any residual market interest rate volatility and offer liquidity insurance to the banking system, including against payment shocks and idiosyncratic stresses. They are consequently set at a spread of +/-100bp around the Bank's official rate. The Bank expects overnight market interest rates to trade in a much narrower range around the Bank's official rate in normal circumstances.
The standing deposit facility is uncollateralised. The standing lending facility is for overnight reverse repo against eligible collateral. On these terms, both standing facilities are available in unlimited size.
The standing facilities are available all day subject to operational constraints arising from deadlines in payments and securities settlement systems.
Key Resources
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List of Standing Facilities Participants 8 May 2008 Download PDF (18k) |
