The U.S. Federal Reserve returned less to the U.S. Treasury and paid more in interest to major banks in 2018 compared to the year before, as it continued trimming its balance sheet as part of a return to more standard monetary policy.
In its annual audited financial statement, released on Friday, the central bank reported it earned $112.3 billion on its asset holdings in 2018, down $1.3 billion from the year before. After paying its own expenses of around $7 billion, it sent $65.3 billion to the Treasury. That represented a decline of around $15.2 billion from the remittances to taxpayers in 2017.
The Fed`s major expense was the $38.5 billion in interest paid to banks on excess reserve deposits held at the Fed, an increase of $12.6 billion over 2017 that reflected the interest rate increases the central bank approved through last year.
The Fed now manages its target interest rate through raising or lowering the "Interest on Excess Reserves," which sets the standard for a range of other interest rates established by financial institutions.
The Fed since October 2017 has been shrinking the amount of Treasury bonds and mortgage-backed securities it holds, reversing the accumulation of securities it launched to battle the 2007 to 2009 economic crisis. Those holdings fell about $379 billion over 2018.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.