Federal Reserve takes $4.7B in latest reverse repo operation, a fraction of its 2022 peak

The Federal Reserve’s overnight reverse repurchase agreement facility accepted $4.736 billion from four counterparties in its latest operation. That number, on its own, sounds big. In the context of this particular facility, it’s practically a rounding error. To put it in perspective: the same facility was absorbing over $2.5 trillion in late 2022. The collapse from trillions to single-digit billions is one of the most dramatic liquidity shifts in recent Federal Reserve history. What the reverse repo facility actually does Think of the Fed’s overnight reverse repo facility as a giant parking garage for cash. Eligible institutions, including primary dealers, banks, and money market funds, can park their excess dollars with the central bank overnight. In return, they receive US Treasury securities as collateral and earn a fixed interest rate. The current offering rate sits at 3.50%. Each eligible counterparty can park up to $160 billion individually, which makes the tiny aggregate totals in 2026 all the more striking. The mechanism exists to serve a specific purpose: keeping the effective federal funds rate within the target range set by the Federal Open Market Committee. By absorbin...