The Federal Reserve's unrealized losses on bond holdings narrowed to less than $850 billion last year.

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ME News report. On Monday, April 15 (UTC+8), the New York Federal Reserve, speaking on its local time, said that the Federal Reserve’s unrealized losses on its massive bond holdings last year narrowed compared with 2024. The book loss for 2025 was $844.2 billion, versus $1.06 trillion in 2024.

This figure was disclosed when the annual report of the System Open Market Account (SOMA) was released. The account covers the Federal Reserve’s large holdings of cash, bonds, and other assets.

The Federal Reserve’s unrealized losses on its bond holdings are mainly accounting items. In the view of the Federal Reserve and many observers, these paper losses do not affect the Federal Reserve’s operations because there are no plans to sell the held U.S. Treasuries and mortgage-backed securities. As long as they are held to maturity, they will not result in actual losses relative to the purchase price.

However, some believe that these paper losses reflect a poor track record of the Federal Reserve using its balance sheet as a tool for market stabilization and stimulus, and they argue that, in theory, these losses could turn into real problems in the future.

(Source: Jin10)

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