Fed income after expenses came in at a negative $114.3 billion last year, versus $58.8 billion in positive income the year before. The loss was tied to a jump in interest expenses faced by the central bank amid a rate hike campaign aimed at cooling inflation. The Fed paid a mix of financial institutions $281.1 billion last year, versus $102.4 billion in 2022.
The Fed pays banks, financial firms and other eligible money managers interest to park cash on the central bank's books as part of how it implements monetary policy and controls short-term rates.
The Fed funds itself through interest it earns on securities it owns and via services it provides banks. Usually it is profitable and hands cash back to the Treasury by law. When it loses money it books what it calls a deferred asset which tallies the loss, which the Fed expects to cover over time before handing profits back to the Treasury again.
(Reporting by Michael S. Derby; Editing by Andrea Ricci)
By Michael S. Derby
