The Federal Reserve’s overnight reverse repurchase (RRP) facility, which allows banks, money-market funds, and government-sponsored enterprises to park excess cash and earn interest, saw usage fall below $200 billion, marking its lowest level since May 2021. Only 41 participants placed $155 billion on Friday, down significantly from a $2.55 trillion peak in December 2022. 

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The RRP, which serves as a tool for the Fed to manage liquidity and maintain control over short-term interest rates, currently offers a 4.8% rate, but rising market rates at 4.93% have drawn cash away. Experts see this drop as evidence of reduced excess liquidity amid the Fed’s quantitative tightening. Dallas Fed President Lorie Logan suggested adjustments to the RRP rate could further encourage cash to move toward private markets.

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