WASHINGTON: The U.S. Federal Reserve reported an operating loss of $18.7 billion for 2025 in its audited financial statements, marking its third consecutive annual deficit though sharply reduced from prior years.
The central bank’s losses, which totaled about $114 billion in 2023 and $77.5 billion in 2024, reflect the strain of higher interest payments on bank reserves and other liabilities after aggressive rate hikes to curb inflation. While interest expenses fell to roughly $167 billion in 2025 from $227 billion the year before, they still exceeded income from the Fed’s holdings of Treasury and mortgage‑backed securities.
Western media reports quoted some outlets citing a total comprehensive loss of $19.6 billion, but the operating loss figure of $18.7 billion matches the Fed’s official statements and has been widely reported by major financial media.
The Fed emphasized that such losses do not threaten its operations. Unlike private banks, it is self‑funded and records cumulative deficits as a deferred asset on its balance sheet – essentially an IOU to itself – which reached about $243.5 billion by year‑end. Future profits will be used to offset this before resuming remittances to the U.S. Treasury.
The central bank also carried large unrealized losses on its bond portfolio, about $844 billion at the end of 2025, improved from more than $1 trillion a year earlier. These paper losses are not realized as the Fed typically holds securities to maturity.
Analysts expect profitability to return in coming years as interest rates stabilize and the balance sheet adjusts. The audited statements are publicly available on the Fed’s website and have been corroborated across major outlets without discrepancies.
