WASHINGTON–The Federal Reserve appears to have “finally turned the corner on a three-year-long string of unprecedented losses tied to how it has implemented monetary policy in the wake of the COVID-19 pandemic,” according to Reuters.
“Over recent weeks, data released by the central bank shows that since the start of November the Fed has started to make enough money again to very slowly start covering an accounting mechanism it uses to capture its losses,” Reuters reported.
The report noted that since early November, the size of the Fed’s so-called deferred asset has gotten smaller, moving from $243.8 billion to $243.2 billion on Nov. 26.
A ‘Clear Shift’
“It’s a small change, but it’s also a clear shift in a long-term trend,” Reuters reported. “Fed watchers do not know how long it will take for the Fed to cover its deferred asset and again return cash to the Treasury, but they suspect that effort will be measured in years.”
Bill Nelson, a former top Fed staffer who is now chief economist for lobbying group the Bank Policy Institute, told Reuters that by tracking the financial performance of the regional Fed banks, the Fed “appears to be on track for the combined profits of the 12 Reserve Banks to be over $2 billion in the current quarter.”
The Fed’s deferred asset tallies up losses that must be covered before the Fed can again return its profits to the Treasury, as it is required to do by law, the report added.
