Episode Details
Back to Episodes
Why the Fed Uses Standing Repo Facilities
Season 2
Episode 60
Published 1 week ago
Description
In this episode of Monetary Policy Explained, Lucas and Luna break down the Federal Reserve's Standing Repo Facility (SRF) and Standing Overnight Reverse Repo Facility (ON RRP). They explore how these tools create a 'floor system' for the fed funds rate, using specific examples from the repo market turmoil in September 2019 and the current post-2024 landscape. The hosts explain why the SRF exists as a backstop for Treasury and agency MFP repo markets, how the ON RRP sets a soft floor for money market rates, and what this means for banks, hedge funds, and Treasury liquidity. A concrete look at a niche but critical part of central bank operations.