The Fed's Reverse Repo Facility Rate

The Fed has a target ban where it wants to keep interest rates. It cannot be lowered more than five basis points above the lower bound of the Fed target. So if you lower the reverse repo by five basis points, that's a little bit less competition for banks who made loans with 3% mortgages and now have to pay 3% on deposits. The best option is to invest at 4%, but there are not enough people in the private market willing to do so.

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