The Federal Reserve's standing facility for lending directly to banks against collateral, priced above market rates as a backstop.
Any solvent bank can borrow at the window against a broad range of collateral, usually for up to 90 days. The primary credit rate is typically set at the top of the target-range, so it is deliberately unattractive relative to market funding.
The problem is stigma: banks fear that using the window signals weakness, so they avoid it even when they need it. That reluctance is exactly what makes funding squeezes worse, and it is part of why the standing-repo-facility exists.
Example: the target range is 5.25% to 5.50% and the primary credit rate is 5.50%. A bank short of cash can borrow there rather than bid 5.80% in the market, but usage data is published with a lag and banks watch it closely.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.Risk and reward on one trade. One trade on a price scale: the entry sits 2.00 points above the stop and 6.00 points below the target, so the shaded reward band is three times the risk band. The ratio compares what is lost if the stop is hit with what is gained if the target is reached.
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