“Fed Is Losing Billions, Wiping Out Profits That Funded Spending”
October 25, 2022
“The bond market is enduring its worst selloff in a generation, triggered by high inflation and the aggressive interest-rate hikes that central banks are implementing. Falling bond prices, in turn, mean paper losses on the massive holdings that the Fed and others accumulated during their rescue efforts in recent years.
Rate hikes also involve central banks paying out more interest on the reserves that commercial banks park with them. That’s tipped the Fed into operating losses, creating a hole that may ultimately require the Treasury Department to fill via debt sales. The UK Treasury is already preparing to make up a loss at the Bank of England…
“Although there are no clear economic constraints to the central bank running losses, there is the possibility that these become more of a political constraint on the ECB,” Goldman Sachs Group Inc. economists George Cole and Simon Freycenet said. Particularly in northern Europe, it “may fuel the discussion of quantitative tightening.”…”
https://finance.yahoo.com/news/fed-losing-billions-wiping-profits-060001473.html
Sounds to me like they are worried about the Fed losing its power to do what ever it wants. If they mishandle the market governments will eventually step in and fix it for them — or at least try.