Definition
A Fed facility where institutions park excess cash overnight. In DLI, ON RRP is subtracted inside the net-liquidity flow: a falling balance releases liquidity, while a rising balance absorbs it.
Money market funds are the primary users of ON RRP. The facility peaked above $2T after COVID-era liquidity injections and later drained sharply as cash moved into T-bills and private funding markets. The current DLI headline uses ON RRP as one component of net liquidity, alongside the Fed balance sheet and TGA, then scores the smoothed 3-6 month flow. When ON RRP is already near zero, it has little remaining room to release additional liquidity. The ON RRP rate (set by the Fed) acts as a floor for short-term rates.