The Fed Is Now Paying $500 Million To A Handful Of Banks Every Day, And Suddenly Has A Very Big Problem

Just over three months ago, on July 1, we were the first to point out a very inconvenient problem resulting from the Fed’s shockingly rapid rate hikes and policy tightening: with the Fed Funds Rate at 1.75%, the US central bank was now paying out nearly a quarter billion in interest every day on its Reverse Repo Facility and on bank reserves parked at the Fed.