What the Decline in ON RRP Means for Markets

September 15, 2025 — All eyes are on the FOMC this week, with markets broadly anticipating a rate cut. Market participants will be closely analyzing the dot plot, the Summary of Economic Projections, and Fed Chair Powell’s press conference for signals on the future policy trajectory. Meanwhile, a quieter but significant shift is unfolding beneath the surface. With the overnight reverse repo facility (RRP) nearly depleted, Treasury bill issuance now directly reduces bank reserve balances, draining liquidity from the financial system. This change elevates the importance of money market dynamics, as tightening liquidity conditions could amplify financial stress.