Fed data suggests central bank has stopped losing money

Core Insights - The Federal Reserve has begun to recover from a three-year period of unprecedented losses related to its monetary policy implementation post-COVID-19 pandemic [1] - Since November 5, the Fed's deferred asset has decreased from $243.8 billion to $243.2 billion, indicating a positive shift in a long-term trend [2] - The combined profits of the 12 Reserve Banks are projected to exceed $2 billion in the current quarter, suggesting a return to profitability [3] Monetary Policy Impact - The Fed's bond-buying spree during the pandemic increased its holdings to a peak of $9 trillion by summer 2022, aimed at stabilizing the financial system and lowering long-term borrowing costs [5] - Rising inflation led the Fed to sharply raise interest rates starting in early 2022, creating a mismatch between income generated and payouts to banks [6] - Recent rate cuts have reduced the Fed's losses by lowering payouts to banks, with the federal funds target rate currently between 3.75% and 4% [7]