The Strategist

The U.S. Federal Reserve reports its first operating loss in years

10/12/2022 - 08:40

The US Federal Reserve posted its first operating deficit in years amid higher interest rates and a decline in investor demand for US assets.

Daniel Foster
Daniel Foster
According to Bloomberg, the U.S. Federal Reserve (Fed) announced its first operating loss in many years.

The Fed figures, as of October 5, show that the operating loss was a negative $2.9 billion. Experts caution that rising interest rates and declining demand for government bonds will cause the U.S. central bank's losses to keep growing.

The agency points out that the U.S. central bank has accrued billions more in interest income in the years after the financial crisis, so this is a remarkable turnaround for the institution.

According to Bloomberg, the Fed will transfer less money to the U.S. Treasury if it has operating losses. It promises a significant change in the economy as a result. The central bank has intensified its campaign against price increases by increasing the interest rate it pays on bank reserves and by using the repurchase agreement as a tool.