Fed reverse repo usage hits record high

While the Fed is implementing its most aggressive tightening of recent times, reverse repo usage has also reached a record high of $2.36 trillion. The Fed’s reverse repo channel, which is seen as a safe haven due to investors having difficulty finding places to invest in the short term, has reached an all-time high with $2.36 trillion parked in it. Despite the Fed’s aggressive rate hikes, money market funds have continued to park money in the Fed’s overnight reverse repo channel. As of Thursday, 102 market participants have deposited $2.045 trillion in the Fed’s overnight reverse repo transactions, where counterparties such as money market funds can deposit cash with the central bank. The previous record was $2.33 trillion on June 30. The facility offers an overnight interest rate of 3.05 percent. This rate was at 2.30 percent before Wednesday, when the Fed raised its policy rate by 75 basis points.