Fed Reverse Repo Use Declines to Lowest in More Than Three Years
- Some 41 counterparties tap RRP, the fewest since June 2021
- Fed facility’s usage tumbled from $2.55 trillion peak in 2022
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The amount of money investors park at a major Federal Reserve facility dropped below $200 billion for the first time since May 2021, reinvigorating debate over how long policymakers can remove cash from the US financial system without triggering a liquidity crunch.
Forty-one participants on Friday put a combined $155 billion at the Fed’s overnight reverse repurchase agreement facility, known as the RRP, which is used by banks, government-sponsored enterprises and money-market mutual funds to earn interest. It marks a steep decline from a record $2.55 trillion stashed on Dec. 30, 2022, according to New York Fed data. The number of counterparties was the smallest since June 2021.