Federal Reserve losses surpass $100 billion, and still rising

Robert Besser
21 Sep 2023, 01:10 GMT+10

Last week, the Federal Reserve said its losses surpassed the US$100 billion mark and will likely continue to increase
The U.S. central bank continues to pay out more in interest costs than it takes in from the interest it earns on its bonds and the services it provides to the financial sector
However, some experts said Fed losses, which began a year ago, could even double before the prices reverse

WASHINGTON D.C.: Last week, the Federal Reserve said its losses surpassed the US$100 billion mark and will likely continue to increase.

The U.S. central bank continues to pay out more in interest costs than it takes in from the interest it earns on its bonds and the services it provides to the financial sector.

However, some experts said Fed losses, which began a year ago, could even double before the prices reverse.

William English, former top central bank staffer now at Yale University, said the Fed could hit a "peak" loss of around $200 billion by 2025.

Meanwhile, Derek Tang, from forecasting firm LH Meyer, said the Fed's losses could be between $150 billion and $200 billion by next year.

The Fed's aggressive campaign to raise interest rates saw it increase its benchmark overnight interest rate from the near-zero level in March 2022 to its current 5.25 percent to 5.50 percent range.

However, as inflation begins to fall, the Fed is expected to stop or reverse its rate increases.

The current level of short-term rates will continue to drive up the net negative income, but the losses will eventually end mainly due to the Fed continuing to shrink its balance sheet, which complements its rate hikes.

In an interview last week, James Bullard, former head of the St. Louis Fed, said that he is "worried" about the central bank's losses and "it would be better not to do this."

The Fed should have kept some of the $1 trillion it has given the Treasury over the last decade to cover the sort of losses it is now navigating, but that is not the system Congress has set up, he added.

Watch latest videos

News RELEASES

Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Poland Sun.

More Information

-1 ℃

Fair in Warsaw

Europe

Section

Ireland warns of season's first snow, roads expected to be iced over

DUBLIN, Ireland: Ireland's national weather service, Met Eireann, has warned that 'snow is possible' for Ireland in the upcoming days, ...

Carmaker Stellantis, China's CATL to build EV battery plant in Europe

AMSTERDAM, the Netherlands: As European carmakers aim to produce more cost-effective batteries and more affordable electric vehicles (EV), Stellantis and ...

US trying to organize coup in Russia Moscow

Deputy Foreign Minister Sergey Ryabkov accused Washington of supporting a change of leadership in the countryThe US is increasingly focused ...

The West opposes all the peoples of Russia Putin

Russophobia, racism and other forms of neo-Nazism have become the official ideology of Western elites, the president has claimedThe official ...

Niger cancels partnership with EU on illegal migration

Coup leaders have claimed that the relevant legislation was passed without considering its negative consequencesNiger's military government announced on Monday ...

Virgin Atlantic flies world's first 100 pc Sustainable Aviation Fuel flight from Heathrow to JFK

London [UK], November 28 (ANI): One of Virgin Atlantic's Boeing 787s on Tuesday took off for the world's first 100 ...

International

Section