JPMorgan withdraws $350 billion from the Federal Reserve before rate cuts

Source: Yellow Original Title: JPMorgan withdraws $350 billion from the Federal Reserve before rate cuts

Original Link: The largest bank in the United States, JPMorgan Chase, moved nearly $350 billion from its Federal Reserve account to U.S. Treasury bonds since 2023.

The move demonstrates how traditional financial giants are repositioning their balance sheets as the Federal Reserve cuts rates.

The bank’s deposits at the Fed fell from $409 billion at the end of 2023 to $63 billion in the third quarter of 2025.

Treasury bond holdings increased from $231 billion to $450 billion.

What happened

JPMorgan executed the transfer when the Federal Reserve cut rates this month to the lowest level in three years.

The Fed raised rates from near zero to over 5% between 2022 and early 2023, then began cutting them at the end of 2024.

Bill Moreland, founder of BankRegData, stated that JPMorgan is “migrating money from the Fed to Treasury bonds” as “rates are falling and they are front-running.”

The bank avoided large bond positions when rates were low in 2020-2021, sidestepping losses that hit Bank of America when rates rose in 2022.

JPMorgan’s withdrawals offset cash movements of over 4,000 U.S. banks combined.

Total bank deposits at the Fed fell from $1.9 trillion to $1.6 trillion since the end of 2023.

Why it matters

The maneuver allowed JPMorgan to secure higher yields before rate cuts eroded returns.

Banks earn interest on deposits at the Federal Reserve, a mechanism implemented in 2008 to manage liquidity.

Those payments reached $186.5 billion in 2024.

In October, the Senate rejected a bill that would have prohibited these interest payments.

Senator Rand Paul argued that the Fed was paying “hundreds of billions of dollars to banks to keep the money idle.”

Republicans Ted Cruz and Rick Scott supported his stance.

Paul’s data showed that the 20 largest banks earned $305 billion in interest on reserves since 2013.

JPMorgan received $15 billion in 2024 while reporting a total profit of $58.5 billion.

The repositioning reflects institutional strategies as monetary policy shifts from a tightening cycle to an easing one.