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American Central Bank records record loss of US$ 114.3 billion- Last Tuesday (26), the Fed (Federal Reserve, American Central Bank) announced net revenue for 2023 and recorded a record loss of US$114.3 billion. This negative value is due to the management of the American economy, which has sought, since June last year, to maintain short-term interest rates between 5.25% and 5.5%. This explains the difference between revenue in 2022 and 2023, since in 2022 the government had not yet decided to adopt the economic control strategy in force now; in 2022, the value announced by the Fed was US$58.8 billion.

Furthermore, the Fed emphasized that, despite the negative numbers, this fact does not interfere with its ability to manage and operate monetary policy.

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Jerome Powell, current president of the Fed (Photo: reproduction/Getty Images Embed)

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What explains the Fed’s negative revenue in 2023

Although it began to increase short-term interest rates in 2022, in the spring, the impact of this measure was only felt this past year. This is due to the fact that, to avoid inflationary growth, the Fed increased interest rates that were previously close to 0%, to current levels, between 5.25% and 5.50%. To maintain the target, it is necessary for the Fed to pay banks, monetary funds and companies specializing in finance so that they deposit dollars at the Central Bank, generating values ​​that are highly affected by interest rates, resulting in the high negative values ​​released this week by the Fed since this policy was maintained for the entire year 2023.

Financial market pressure and elections

The current monetary policy has been bringing positive results to the American economy, as shown by some research carried out for the first quarter of this year; Among the improvements are increasing employability and stabilization in the prices of imported products, thus reducing apprehension about the economy, a specter that has haunted the USA since the pandemic.

However, although current interest rates have brought improvements to the economy, they directly affect the cost of loans, generating pressure from financial markets for the FED to lower interest rates, however, with the American economy more stabilized in recent months and Based on what was said at its last meeting, in February, the institution’s view is that this is a time for “caution”, as changing interest rates now could hinder the entire economic recovery process, especially in an election year .

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Featured Photo: Fed building in Chicago (Reproduction/Joshua Woroniecki/Unsplash)

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American Central Bank records record loss of US$ 114.3 billion

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American Central Bank records record loss of US$ 114.3 billion

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