Fed: Rising income costs cut funds handed back to Treasury last year

NEW YORK (Reuters) - The Federal Reserve said on Friday that rising interest costs cut into the amount of money it handed back to the Treasury last year compared to what it handed back in 2021.

The Fed returned $76 billion to the Treasury last year, down from $109 billion the year before, the central bank said as part of an audited financial statement released Friday. It updated figures first released in January.

The Fed said that it earned $58.8 billion last year versus$107.9 billion in 2021. Rising costs related to interest ate into the Fed's bottom line and left it with what it calls a $16.6 billion deferred asset by year's end, which describes what is essentially a loss for the central bank. That loss does not impact its ability to operate or conduct monetary policy.

By law the Fed returns profits after covering operating expenses to the Treasury. Over the last year the Fed has lifted its short-term rate target aggressively which has sharply increased the interest rates it pays banks, money funds and others to keep cash at the central bank.

(Reporting by Michael S. Derby; Editing by Andrea Ricci)

By Michael S. Derby