On April 12, the New York Fed released the 2022 Systematic Open Market Accounts (SOMA) annual report on Tuesday. In the report, the bank stated that the current US$8.7 trillion in assets held by the Federal Reserve may fall to 6 by mid-2025. Trillion or so, and then hold steady for a year or so.
Holdings are then expected to grow in order to maintain balance with economic growth. The report also forecasts the bank’s net negative income scenario.
The rate hikes have contributed to a sharp increase in the Fed’s interest rate costs, which now exceed the income it earns from services and interest on its bond holdings.
While the Fed is still able to hand over excess profits to the Treasury in 2022, its revenues turned negative late last year.
“The forecast of negative net income suggests that remittances to the U.S. Treasury will be suspended for a period of time,” the report said.