Fed faces years of losses as interest rates rise
QE brought major interest rate risk onto central bank’s balance sheet
The US Federal Reserve is set to face years in which it suffers losses due to the effects of interest rate risk stemming from its hefty asset holdings.
The balance sheet peaked at a size of $8.97 trillion in April and has shrunk only slightly since then as quantitative easing unwinds, declining to $8.9 trillion on July 11. By purchasing bonds during the Covid-19 crisis, the Fed brought interest rate risk onto its balance sheet, helping to stabilise markets, cut government borrowing costs and
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