A facility provided by the Fed allowing Depository Institutions to lend reserve cash to the Fed overnight (in exchange for a security, often Treasury Bills) in order to receive interest on the deposited cash. Is a type of Open Market Operation.

The Fed borrows money from the bank overnight and provides a treasury security or low risk corporate debt as collateral. The Fed then pays interest on this borrowed cash overnight. At the end of the term (night), the Fed gets the security back and the bank gets the principle and interest back, ultimately allowing it some return on reserves that would otherwise not have any return.

History of the rate charted: