The Fed started losing money last month, sooner than many expected, including the Congressional Budget Office, which saw no losses for the US central bank in a forecast released in September.
The entity accounts for the negative income with an accounting measure that it calls deferred assets. The size of that shortfall now stands at nearly $6.3 billion, and while there is great uncertainty about the future size and duration of that loss, there are some rough estimates.
“ANDThe deferred asset account is likely to top out at $100 billion to $200 billion, and it will likely take three to four years to recover.”said Derek Tang of LH Meyer Monetary Policy Analytics.
A July Fed research paper had as its baseline expectation the view that it would operate at a loss for three to four years and book $60 billion of deferred assets, based on the then-current monetary policy outlook.
Nevertheless, The document also indicated that the loss could reach 180,000 million dollars if the central bank has to raise interest rates much more than expected in mid-summer.
The expected trajectory of losses is “bad, but not too bad,” said William English, a former senior IMF official who is now at Yale University.
US inflation
Inflation remained stable in September in the United States, at 6.2% at one year and 0.3% at one monthaccording to the PCE index, the inflation indicator preferred by the Federal Reserve (Fed, central bank) and published on Friday by the Department of Commerce.
These figures come two weeks after the publication of another indicator of inflation, the CPI index, a reference in particular for the indexation of pensions.
The data for September, published in mid-October, had shown a very timid slowdown in one year (8.2% compared to 8.3% the previous month), and even a new acceleration in one month, to 0.4%. .
Source: Ambito
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