The US Federal Reserve posted its biggest-ever operating loss last year, it announced Friday, as the impact of higher interest rates caused its interest expense to surge.

The Fed began rapidly raising the benchmark lending rate in March 2022 as policymakers looked to puncture a surge in prices that pushed inflation well above its long-term target of two percent.

Policymakers swiftly lifted rates to a 22-year high, and have held them steady since then, leading to a sharp rise in the cost of interest the US central bank pays out to banks that store their money at the Fed.

As a result, the Fed's expenses exceeded its estimated earnings by 114.3 billion, the central bank announced in a statement.

However, although the Fed incurred its worst-ever operating loss in 2023, it does not need to ask the Congress -- or the Treasury Department -- for more money to make ends meet.

In normal times, the Fed's 12 regional banks transfer their earnings from holding securities to the Treasury Department, after deducting costs like the interest they pay to banks.

But when the Fed loses more than it earns, as has been the case since September 2022, it simply books these losses as a "deferred asset," and broadly stops paying money to the Treasury.

Once the Fed starts earning more than it spends again, as will likely happen once interest rates fall, it will only begin paying profits to the Treasury once they exceed these deferred assets.

Given the size of the Fed's losses last year, and its cumulative "deferred asset" of 133 billion since it started losing money in September 2022, this is likely to take some time.