Policy Tools
Standing Repurchase Agreement
Since 2021, the Federal Reserve has conducted standing repurchase agreement (SRP) operations. SRP operations supply liquidity to eligible counterparties and thereby limit upward pressure and help provide a ceiling on overnight money market rates to support monetary policy implementation and smooth market functioning.
SRP operations serve as a source of financing for eligible counterparties when it is economically sensible. SRP operations limit upward pressures in overnight funding markets that could spill over to the federal funds markets and impair the implementation and transmission of monetary policy.
When the Federal Reserve conducts an overnight repo, it buys a security from an eligible counterparty and simultaneously agrees to sell the security back the next day. The difference between the purchase price and the sale price of the securities implies a rate of interest earned by the Federal Reserve on the transaction. The FOMC sets the SRP rate. The securities accepted in SRP operations include Treasury securities, agency debt securities, and agency mortgage-backed securities.
Related Information
For the current SRP rate and other operational settings for the policy tools that support the FOMC's target range for the federal funds rate, see the Committee's most recent implementation note.
Statement Regarding Repurchase Agreement Arrangements