The Federal Reserve's balance sheet has undergone significant changes since 2007, reflecting its response to major economic crises. From a modest 0.9 trillion U.S. dollars at the end of 2007, it ballooned to approximately 6.76 trillion U.S. dollars by March 2025. This dramatic expansion, particularly during the 2008 financial crisis and the COVID-19 pandemic - both of which resulted in negative annual GDP growth in the U.S. - showcases the Fed's crucial role in stabilizing the economy through expansionary monetary policies. Impact on inflation and interest rates The Fed's expansionary measures, while aimed at stimulating economic growth, have had notable effects on inflation and interest rates. Following the quantitative easing in 2020, inflation in the United States reached eight percent in 2022, the highest since 1991. However, by November 2024, inflation had declined to 2.7 percent. Concurrently, the Federal Reserve implemented a series of interest rate hikes, with the rate peaking at 5.33 percent in August 2023, before the first rate cut since September 2021 occurred in September 2024. Financial implications for the Federal Reserve The expansion of the Fed's balance sheet and subsequent interest rate hikes have had significant financial implications. In 2023, the Fed reported a negative net income of 114.3 billion U.S. dollars, a stark contrast to the 58.84 billion U.S. dollars profit in 2022. This unprecedented shift was primarily due to rapidly rising interest rates, which caused the Fed's interest expenses to soar to over 281 billion U.S. dollars in 2023. Despite this, the Fed's net interest income on securities acquired through open market operations reached a record high of 174.53 billion U.S. dollars in the same year.

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Graph and download economic data for Assets: Liquidity and Credit Facilities: Loans, Net: Wednesday Level (H41RESPPALDNNWW) from 2002-12-18 to 2025-03-19 about liquidity, credits, Net, assets, loans, and USA.

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Graph and download economic data for Assets: Liquidity and Credit Facilities: Net Portfolio Holdings of Commercial Paper Funding Facility LLC: Wednesday Level in Federal Reserve District 1: Boston (DISCONTINUED) (H0RESPPAACHF01NWW) from 2002-12-18 to 2010-08-25 about CPFF, Boston, liquidity, credits, Net, assets, and USA.

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Graph and download economic data for Assets: Liquidity and Credit Facilities: Net Portfolio Holdings of LLCs Funded Through the Money Market Investor Funding Facility: Week Average (DISCONTINUED) (H0RESPPAAMMIHXAWNWW) from 2002-12-18 to 2009-11-04 about liquidity, credits, average, Net, assets, and USA.

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Graph and download economic data for Assets: Liquidity and Credit Facilities: Loans: Bank Term Funding Program, Net: Change in Week Average from Year Ago Week Average (H41RESPPALDKXAWXCH52NWW) from 2002-12-18 to 2025-03-05 about BTFP, liquidity, balance, credits, Net, assets, loans, and USA.