The Federal Reserve accepted $1.853 billion from seven counterparties in its latest overnight reverse repurchase operation, continuing a pattern of historically low usage for a facility that once served as the financial system’s biggest parking lot for excess cash.
To put that number in perspective: at its peak during 2022-2023, the ON RRP facility regularly absorbed more than $2 trillion per day. The current figure represents a decline of more than 99% from those highs.
What the reverse repo facility actually does
The Federal Reserve’s overnight reverse repurchase facility allows money market funds, government-sponsored enterprises, and other eligible financial institutions to park their excess cash with the Fed overnight. In return, they receive Treasury securities as collateral, earning a fixed rate of interest.
The award rate for this operation was 3.50%, consistent with the prevailing federal funds target range.
