On 30 December 2022, money market funds and other firms lent $2.55 trillion to the Federal Reserve through one overnight facility. On 5 October 2026, the same facility took in $1.0 billion.
That facility is the Overnight Reverse Repo Facility (ON RRP). The Fed built it to set a minimum level for US overnight interest rates. Here is how it works, who uses it, why it filled up and why it has now emptied.
What is the reverse repo facility? The Overnight Reverse Repo Facility (ON RRP) lets money market funds and other approved firms lend cash to the Federal Reserve overnight. The Fed hands over Treasury bonds as security and pays a fixed rate, set at the bottom of its target range for the Fed Funds Rate.
The ON RRP rate is 3.75%, as of 5 October 2026. That is the bottom of the Fed's target range of 3.75% to 4%.
Use peaked at $2.55 trillion on 30 December 2022. It was $1.0 billion on 5 October 2026.
From June 2022 to December 2025, the Fed shrank its balance sheet. Most of that fall was matched by cash leaving this facility. Bank reserves, the cash banks keep at the Fed, fell by far less.
How the ON RRP works
A repo is an overnight loan of cash backed by bonds. We explain the market in What Is the Repo Market?
In the ON RRP, the Fed borrows the cash. The firms lend it, so for them the trade is a reverse repo. That gives the facility its name. The New York Fed runs one operation each business day, from 12:45pm to 1:15pm Eastern time:
The firm hands over cash. The Fed hands over Treasury bonds from its own holdings as collateral.
The next day, the trade reverses. The firm gets its cash back, plus interest at the ON RRP rate.
Each firm can lend up to $160 billion a day. That limit has applied since 23 September 2021.
Four kinds of firm can take part: money market funds, banks and government-sponsored enterprises such as Fannie Mae, plus primary dealers. Primary dealers are the firms that trade directly with the Fed.
The Fed began testing the facility in September 2013. It became a policy tool in December 2015.
Why the ON RRP puts a floor under interest rates
Reserves are the cash banks hold in their accounts at the Fed. Banks earn a rate on them, called Interest on Reserve Balances. It has been 3.90% since 17 September 2026. Money market funds cannot hold reserves, so they cannot earn it. We explain both rates in How the Fed Sets Rates.
The ON RRP gives those funds a risk-free 3.75% instead. A fund that can use the facility has no reason to lend overnight to anyone else for much less. So the ON RRP rate acts as a floor under private overnight rates.
The floor can leak. A 2022 New York Fed explainer notes that it sets the rates at which eligible firms are willing to lend. Lenders outside the facility can still accept less. A 2025 Fed staff note by Erik Bostrom adds a second reason: some funds lent a little below the ON RRP rate to keep their ties with dealers.
The Fed has set the ON RRP rate at the bottom of its target range since 19 December 2024. From June 2021 until then, it sat 0.05 percentage points above the bottom.
The rise and drain of the ON RRP, 2013 to 2026
Source: Federal Reserve Bank of New York; YX Insights
The chart shows the cash lent to the Fed through the facility each day. Before 2021, use was small. It stayed below $0.5 trillion from 2013 to 2017. From 2018 to 2020, the median day was under $2 billion, close to zero on this chart. In January 2021, the mean was still under $1 billion a day.
Use passed $1 trillion on 30 July 2021 and $2 trillion on 23 May 2022. It peaked at $2.55 trillion on 30 December 2022, with 113 firms taking part that day.
A 2023 study by New York Fed economists Gara Afonso and four co-authors links the rise to a shortage of Treasury bills, the government's debt of a year or less. Bills outstanding fell from $4.95 trillion to $3.51 trillion between January 2021 and July 2022. Money market funds had fewer bills to buy, so they put more cash in the facility. The study puts about $750 billion of the $2.2 trillion rise down to the bill shortage alone.
The drain began in mid-2023. Use fell below $1 trillion on 9 November 2023. It fell below $100 billion on 20 December 2024. The 2025 Bostrom note found that money market funds made up over 95% of the fall from April 2023. They moved the cash into Treasury securities and private repo loans.
Private repo rates moved from below the ON RRP rate to above it
The Secured Overnight Financing Rate (SOFR) is the rate on overnight private loans backed by Treasury bonds. We explain it in SOFR vs LIBOR. The Bostrom note calls private overnight Treasury repo the closest private equivalent to the ON RRP. Small gaps between rates are measured in basis points. A basis point is 1/100 of a percentage point.
Source: FRED (SOFR); Federal Reserve Bank of New York; YX Insights
The chart shows the gap between SOFR and the ON RRP rate, as a yearly mean. Above zero, private lending paid more than the Fed. Below zero, it paid less.
The gap was below zero in 2022 only. That year, SOFR averaged 1.5 basis points below the ON RRP rate, which is the floor leaking. Private lending paid less than the Fed, so cash flowed to the Fed. Use averaged $2.00 trillion that year.
The gap has widened every year since 2023. In 2026, to 2 October, SOFR has averaged 13.6 basis points above the ON RRP rate. On 2 October, SOFR was 3.88%, against the Fed's 3.75%. Use has averaged $2.4 billion a day this year.
The ON RRP, bank reserves and Quantitative Tightening
Cash lent to the ON RRP and reserves both sit on the liability side of the Fed's balance sheet. When a fund moves cash into the facility, reserves fall by the same amount. When it moves cash out, reserves rise.
From June 2022 to December 2025, the Fed shrank its balance sheet by letting bonds mature without replacing them. This is Quantitative Tightening (QT), the reverse of the bond buying we explain in What Is Quantitative Easing?
Source: FRED (WALCL, WRESBAL); Federal Reserve Bank of New York; YX Insights
From 1 June 2022 to 3 December 2025, the Fed's total assets fell by $2.38 trillion. Over the same span, ON RRP use fell by $1.96 trillion. Reserves fell by $0.46 trillion.
The two falls add up to a little more than the fall in assets. Other items on the Fed's balance sheet make up the gap. One is the Treasury General Account, the US government's own cash account at the Fed.
So the facility absorbed most of the shrinkage. The Bostrom note reached the same finding. That cushion has now gone. With the facility near empty, it can no longer absorb a fall in Fed assets. The Fed ended QT on 1 December 2025. Since December 2025, it has bought Treasury bills to keep enough reserves in the banking system.
How to read the ON RRP figure
A few points help when you see the number:
Where to find it. The New York Fed posts the result of each day's operation on its website soon after it closes. FRED, the St. Louis Fed's data site, carries it as RRPONTSYD.
Watch the quarter ends. Use often jumps for a day or two. On 28 September 2026 it was $0.85 billion. On 30 September it was $11.5 billion.
Read it against SOFR. A large balance means private overnight rates are at or below the ON RRP rate. A tiny balance means private rates pay more than the ON RRP rate.
Read it with reserves. Both appear in the Fed's weekly balance sheet, the H.4.1 release.
The reverse repo facility is the Fed's overnight borrowing window for money market funds. It sets a floor under rates at 3.75%. It filled to $2.55 trillion when bills were scarce, then emptied as private rates rose above the floor.
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