Archive · 28 Nov 2025
Fed's Financial Turnaround Improves Treasury Outlook
The Federal Reserve, which controls interest rates, has been losing money because it had to pay more interest on bank reserves.
This is a big change because the Fed usually makes money.
The losses don't affect its daily work, but they look bad and mean less money for the U.S. Treasury.
Recently, some parts of the Fed are making money again, which could help the Treasury soon.
If the Fed cuts interest rates more, it might make money even faster, but that could affect inflation.
The Federal Reserve recorded significant losses in 2023 and 2024 due to higher interest rates on bank reserves.
The Fed's losses do not impact its daily operations or monetary policy but affect its ability to send money to the Treasury.
Some regional Fed banks, like the Atlanta and St. Louis Feds, have started sending money to the Treasury again.
The Fed's deferred asset account has improved by $39 billion since October 8, 2024.
Further interest rate cuts could help the Fed return to profitability faster, potentially benefiting the Treasury.
- Who
- Federal Reserve (Fed)
- What
- Fed's financial turnaround and its impact on the Treasury
- When
- 2023-2024, with improvements noted in 2024
- Where
- United States
- Why
- Due to higher interest rates and changes in the Fed's financial operations
- Fed's Deferred Asset (as of 2024)
- -$243.4 billion
- Fed's Deferred Asset (as of 2023)
- -$20 billion
- Atlanta Fed's Treasury Payments Start
- March 2024