The central banks losses could continue for as long as short-term interest rates remain near current levels. Unlike federal agencies, the Fed doesnt have to go to Congress to cover operating losses, the newspaper said, adding that the Fed created an IOU in 2022 that it calls a "deferred asset." Between 2012 and 2021, remittances as a share of federal receipts nearly doubled. The Fed sent more than $870 billion to the Treasury over those 10 years, including $109 billion in 2021.The Wall Street Journal stressed that the Fed is likely to continue running accounting losses for as long as it holds interest rates above around 3.5% and shrinks its asset portfolio, a process that began in 2022. The Fed raised rates last year to a range between 5.25% and 5.5%.

Source: Wall Street Journal January 14, 2024 10:30 UTC