The scheme "will support the flow of credit to where it is needed, complementing the MPC's asset purchase programme in easing monetary policy conditions", he said in a letter to Bank of England governor Sir Mervyn King.

BBC: Funding for Lending scheme aims to cut loan costs

"Growth is likely to be weak in the near term but further out a continued easing in domestic credit conditions, supported by the Bank's asset purchase programme and the Funding for Lending Scheme, together with the stronger global backdrop, underpin a slow but steady recovery in output, " the governor said.

BBC: Inflation to stay above target, says Bank of England