Fed posts record loss of $114.3 billion in 2023

The Federal Reserve said on Tuesday that it officially saw a net negative income of $114.3 billion in 2023, a record loss tied to expenses related to managing the U.S. central bank’s short-term interest rate target.

The loss last year follows $58.8 billion in net income in 2022, the Fed said. The numbers released were an audited tally following preliminary numbers reported earlier this year. The Fed has stressed repeatedly that net negative income does not impede its ability to operate or conduct monetary policy.

By law, the Fed hands over any profits after covering operational expenses to the Treasury. The Fed earns income from services it provides the financial system and from interest income on securities it owns. It has earned significant profits over recent years amid very low rates and large levels of bond holdings.

The Fed’s move to aggressively boost the federal funds rate starting in the spring of 2022 has upended central bank finances. To cool inflation pressures, the Fed lifted the target from near zero levels to its current 5.25% to 5.5% range.

 

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