WASHINGTON, Jan. 10 (Xinhua) -- U.S. Federal Reserve said on Wednesday that its remittances to U.S. Treasury Department are expected to continue to decline in 2017 due to increases in interest payments to commercial banks.
The Fed is expected to pay about 80.2 billion U.S. dollars to the Treasury in 2017, down from the 91.5 billion dollars in 2016, and falling for a second year in a row, according to preliminary estimates by the Fed.
The drop was primarily due to the increases in the central bank's interest payments to commercial banks for their reserves deposited at the central bank. In 2017, such payments increased 13.8 billion dollars.
After the global financial crisis, the Fed adopted a series of bond-buying programs in order to stimulate the economy. The central bank could use the profits of its bond holdings to cover its own operating expenses and sends the rest to the U.S. Treasury.
The Fed's remittances to the Treasury peaked 97.7 billion dollars in 2015, but began to decline after the Fed raised interest rates in December 2015 for the first time since the financial crisis.
Such remittances are expected to decline further as the Fed in last October began to shrink its 4.5 trillion dollar balance sheet which was accumulated during the bond-purchasing programs.
