[JumpCrisscross]

> Can anyone better at understanding economics explain what this means to me?

Reverse repos involve banks buying securities from the Fed in the evening, with the Fed agreeing to buy them back in the morning for another price. Until recently, the first price and second price were the same. Now, the second price is 0.05% higher (annualised).

Banks are parking a trillion dollars with the Fed overnight. That’s a trillion dollars that won’t be lent, i.e. won’t contribute to growth or inflation.

[trenning]

Does that mean the fed is earning ~$50billion in interest a day?

That seems good for our national budget unless I'm misinterpreting it.

[protoax]

Where are you getting that figure from? 0.05% is $500m.

[skzv]

It's also annualized, so it's $500m over the entire year.

And it's interest earned by the banks, not the Fed.

[altspace]

No, Fed is Paying ~$1.37 Million in interest a day

[tru3_power]

Why exactly is the 2nd price higher? What purpose does that serve/what does it signal?

[skzv]

I think it incentivizes banks to buy the securities from the Fed (to hold overnight). Otherwise why bother?