Fed Reverse Repo Usage Drops to Lowest Since 2021 as US Treasury Cash Surges Past $415 Billion on $5.1T Tax Collection

The Federal Reserve's reverse repurchase (RRP) facility usage has declined sharply in the days following the U.S. Tax Day, dropping from approximately $150 billion last week to around $55 billion by April 16, 2025, marking the lowest level since 2021. This decline reflects a significant outflow of cash from money market funds as taxpayers fulfill their obligations, leading to increased cash inflows into the U.S. Treasury's general account at the New York Fed, which surpassed $415 billion. The Treasury Department collected $5.1 trillion in taxpayer dollars during the 2024 fiscal year, funds that support various government programs including Medicare, Social Security, education, scientific research, and defense. Despite the drop in RRP usage, the Federal Reserve has mitigated potential liquidity issues by tapering its asset sales to $5 trillion per month. Market observers note that the decrease in RRP activity is largely driven by tax-related cash movements rather than underlying financial instability.