Fed’s paper losses exceed $1T in 2024

The US Federal Reserve recorded more than $1 trillion in unrealized losses on its bond portfolio in 2024, as rising market interest rates across maturities weighed on the value of its holdings, though some of the losses were partially offset by a reduction in the central bank’s securities holdings.

According to the New York Fed’s annual report on open market operations, unrealized losses reached $1.06 trillion last year, up from $948.4 billion in 2023.

The report noted that the losses reflect the difference between the book value of the securities held and their current market value. These paper losses do not impact the Fed’s monetary policy operations and are not considered a significant concern, as the central bank typically holds the securities to maturity.

The size of the Fed’s balance sheet has ballooned in recent years, peaking at around $9 trillion in 2022 following large-scale purchases of Treasury and mortgage-backed securities aimed at stabilizing markets and supporting the economy during the COVID-19 pandemic.