Fed Reverse Repo Use Declines to Lowest in More Than Three Years

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 ...