I was wonder the impression that banks could always borrow reserves from the Fed at e.g. 100 bps above the Fed funds rate target. Guess I was mistaken?
I believe the idea is that not all entities and institutions are eligible to borrow via the FED discount window, e.g. there is the primary credit system (primarily banks), and the second credit system (for some other low risk entities). Thus the repo market serves this segment of the market for liquidity.
Oh I see. I assumed the rates had spiked in the federal funds market, which also uses repos.