The U.S. Federal Reserve’s losses surpassed $200 billion this week, reflecting the financial strain caused by its high-interest rate policies aimed at reducing inflation. The Fed’s negative balance, termed a “deferred asset,” means it cannot return earnings to the Treasury until it covers this shortfall.
The losses stem from the payments the Fed makes to banks and money funds to manage interest rates, which have outpaced its earnings from bonds. The Fed’s financial situation began deteriorating two years ago, aggravated by rapid rate hikes between 2022 and 2023. Despite the losses, no significant political backlash has emerged.
Fed’s paper losses top the $200 billion mark
Oct 07, 2024
Article from Reuters by Michael S. Derby
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