Annual Report on Open Market Operations

This report reviews open market operations directed by the Federal Open Market Committee (FOMC) within the Federal Reserve’s System Open Market Account (SOMA), provides an overview of the Federal Reserve’s monetary policy implementation framework, and reviews balance sheet developments over 2024. As in prior years, the report includes illustrative projections of how SOMA domestic securities holdings, reserve balances, and associated net income may evolve in the future.

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The Federal Open Market Committee continued the process of reducing the size of the Federal Reserve’s balance sheet during 2024. Scroll down to learn more about what drove changes on both sides of the balance sheet during the year.

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Runoff of the SOMA Securities Portfolio

Note: Figures are weekly and include unsettled holdings. Agency CMBS are included in the agency MBS amount.
Source: Board of Governors of the Federal Reserve System

In line with the FOMC’s directives, SOMA holdings of Treasuries and agency MBS decreased by nearly $700 billion during 2024. The runoff of SOMA securities, which make up 95 percent of Federal Reserve assets, drove the overall decrease in the size of the balance sheet.

During the year, balance sheet runoff continued to be guided by the monthly caps set by the FOMC. The FOMC directed a slowing of balance sheet runoff in June by decreasing the cap on Treasury securities redemptions from $60 billion to $25 billion. Holdings of Treasury securities (in light blue) declined from $4.79 trillion to $4.29 trillion during 2024, making up about 70 percent of total SOMA runoff by the end of 2024.

The FOMC kept the monthly agency MBS cap unchanged at $35 billion during 2024. As principal payments remained well under this cap, there were no reinvestments. Agency MBS holdings (in bright blue) decreased from $2.42 trillion to $2.23 trillion, making up about 30 percent of total SOMA runoff by the end of 2024.

Shifts in Federal Reserve Liabilities

Note: Figures are weekly. Other liabilities include deposits from international and multilateral organizations, government-sponsored entities, designated financial market utilities, and other non-reserve liabilities.
Source: Board of Governors of the Federal Reserve System

Total liabilities and capital declined by about $767 billion to reach $7.07 trillion. The shift in the composition of liabilities was largely driven by the significant decrease in ON RRP facility take-up (in dark green).

Usage of the ON RRP (in dark green) continued to decline in 2024, with balances decreasing from an average of $808 billion in December 2023 to an average of $171 billion in December 2024—the lowest level since early 2021.

This decrease in ON RRP balances reflected money market fund counterparties shifting toward more attractive investments, such as U.S. Treasury bills and private repo agreements. At its December meeting, the FOMC reduced the ON RRP offering rate by five basis points to align it with the bottom of the federal funds target range.

During the year, the ON RRP facility and other non-reserve liabilities decreased by less than the declines in SOMA securities. As a result, reserve balances (in light gray) decreased modestly, but remained at abundant levels.

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Prepared for the Federal Open Market Committee (FOMC) by the
Markets Group of the Federal Reserve Bank of New York
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