Lee,
Could the RRP been designed to stop t-bill rates from going negative or keep pressure on yields due to a shortage of available t-bills. Basically having RRP as another form of savings, this removes the normal market pressure of excess funds from t-bill paydowns seeking fewer and fewer t-bills (keeping rates artificially lower). Allows a t-bill market that can react or be pushed higher in yield due to the Fed’s directive to address inflation. RRP simply sucks that available money that would have otherwise made it more difficult for short term t-bill rates to rise. Thus when the Fed raises rates, like you say, they are reacting to the market which has already moved. But it is the structure of RRP that has allowed the short term markets rates to move higher by tightening money flow into the T-bill market.
