> Demand for the so-called RRP facility has surged since the Fed boosted the offering rate on it to 0.05% from 0% last month as a flood of cash continues to overwhelm the U.S. dollar funding markets. That’s in part a result of central-bank asset purchases and drawdowns of the Treasury’s cash account, which is pushing reserves into the system.

This article kind of leaves the significance of what's happening as an exercise for the reader.

The Fed is in the fight of its life to hold back negative short term interest rates. That 0.05% in the RRP is the only thing standing in the way. Yes, this is ironic (and alarming) because QE was supposed to drive down long rates and thereby entice borrowers to borrow. However, the massive drawdown of the TGA (the Treasury's account with the Fed) has left the banks starved for good collateral yielding anything. Money market funds are obligated by law to buy short-erm US Treasuries. Throw in various government transfers clogging up the banking system, and all of this puts huge pressure on short-term notes.

QE is only inflationary if banks lend against the collateral they receive as a result of QE. So far, that hasn't been happening much. So the potential here is a deflationary shock that few are expecting, with negative rates across the yield curve leading the way.