The combination of the Fed’s rate cuts and a drop in RRP usage could set the stage for liquidity strains, potentially leading to another repo crisis similar to what happened in 2019.

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As expected, RRPs are down again, now below $100 billion as Fed's rate cut has reduced incentive to park liquidity at this facility; we'll be seeing repurchase agreements ramping up in the New Year and then the '19 repo crisis may repeat: https://t.co/lboowxcZmU pic.twitter.com/8S4dLXHCjb

— E.J. Antoni, Ph.D. (@RealEJAntoni) December 20, 2024

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