The Federal Reserve announced Wednesday that it reduced its operational deficit significantly in 2025, according to newly released audited financial records.
In its comprehensive financial statement, the central bank disclosed annual losses totaling $19.6 billion for 2025, marking a substantial improvement from the $77.5 billion deficit recorded in 2024 and the $114.6 billion shortfall from 2023. The Fed’s last profitable year was 2022, when it generated $76 billion in returns for the federal government, though this was below the $109 billion it contributed in 2021.
The Federal Reserve’s financial difficulties stem directly from its expanded balance sheet, which grew dramatically during the coronavirus pandemic. During that period, the central bank purchased massive quantities of Treasury securities and mortgage-backed bonds to steady volatile financial markets and stimulate the economy when traditional interest rate cuts were no longer possible due to rates already being near zero.
