Definition
A Fed facility where money market funds and other firms can park cash overnight and earn a set rate.
The story
If you had billions in cash for one night, you'd want a safe place that pays something. The Fed offers one. The rate it pays helps set a floor under short-term rates across the market.
Why markets watch it
How much cash sits there is watched as a read on spare money in the system.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms