News Summary

• Rising income expenses pushed the Federal Reserve system deep into a record loss last year, the central bank said in preliminary figures released on Friday.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..
• Meanwhile, interest it earned from bonds the central bank owns totaled $163.8 billion last year, versus $170 billion in 2022..
• Meanwhile, it may also be approaching the end game for balance sheet shrinkage.This could ultimately cap the losses, which until recently some analysts were putting in the $150 billion to $200 billion range..
• Meanwhile, recent research from the St. Louis Fed said it would likely take the Fed four or so years to cover its loss and start returning money to the Treasury.Losing money doesn’t impair the Fed’s ability to conduct monetary policy, officials have stressed repeatedly..
• At the same time, the Fed has yet to face any real political pushback over the losses..