General TradingR

Reverse Repo (RRP)

A transaction in which a central bank sells securities to counterparties with an agreement to repurchase them at a later date, effectively draining liquidity from the financial system. It is used to set a floor on short-term interest rates.

Example

“When the Fed's overnight reverse repo facility hit $2.5 trillion, it signaled that massive amounts of excess cash were being parked at the Fed rather than flowing into the broader economy.”