BlockBeats News, March 25, Morgan Stanley analysts stated in a report on Monday that the Federal Reserve seems poised to end its historic streak of consecutive losses and may return to a path of remitting cash to the Treasury. This involves the relationship between how the Federal Reserve makes money to fund its operations and the cash the Federal Reserve pays to maintain control over short-term interest rates. The aggressive rate hikes that began three years ago have severely impacted the Federal Reserve's accounts, and now, with short-term interest rates declining, Morgan Stanley believes the Federal Reserve is nearing a critical point of restoring profitability.

Morgan Stanley believes the breakeven interest rate for the Federal Reserve is around 4.8%. "The reduction of the balance sheet along with lower policy rates allows the Federal Reserve to get out of losses. Analysts say the continued reduction of bond holdings and the prospect of further rate cuts "means the Federal Reserve will begin to return to profitability again."

The Federal Reserve announced its financial situation for 2024 last Friday, showing a total comprehensive net loss of $77.5 billion for 2024, following a record deficit of $114.6 billion in 2023. The last time the Federal Reserve was profitable was in 2022. (Golden Ten)