Rising Line on Fed’s Balance Sheet Offers Clue on Fate of Portfolio Unwind

An often overlooked segment of the Federal Reserve’s balance sheets has been growing and could boost the Fed’s ability to stop shrinking its portfolio sooner than expected.

A set of deposits held by the Chicago Fed — referred to by the term “other” — has risen $70 billion over the past seven weeks, to $168 billion, the second highest its been since July 2022, according to the latest weekly data. The category includes a combination of interest-bearing balances held by financial market utilities — such as clearinghouses — that are given access to Fed accounts where they can earn interest.