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Illya Gerasymchuk
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User Illya Gerasymchuk -

2025-07-31 10:11

Overnight Reverse Repo Rate (ON RRP) defines the rate at financial institutions can lend money overnight to the FED in return the FED provides treasury bonds as a collateral ON RRP is accessible to both banks & non-banks (e.g. money market funds)

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since banks can always deposit cash into their reserve account account at the FED and earn the IORB rate they have little incentive to lend at rates below IORB effectively, this sets the floor (lower bound of the corridor) for interest rates for banks

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