WASHINGTON: The US Federal Reserve posted its biggest ever operating loss last year, it announced Friday, as the impact of higher interest rates caused its interest expense to surge.

The Fed began rapidly raising the benchmark lending rate in March 2022 as policymakers looked to puncture a surge in prices that pushed inflation well above its long-term target of two percent.

Policymakers swiftly lifted rates to a 22-year high, and have held them steady since then, leading to a sharp rise in the cost of interest the US central bank pays out to banks that store their money at the Fed.

As a result, the Fed’s expenses exceeded its estimated earnings by 114.3 billion, the central bank announced in a statement.

However, although the Fed incurred its worst-ever operating loss in 2023, it does not need to ask the Congress — or the Treasury Department — for more money to make ends meet.

Published in Dawn, January 14th, 2024