MNI: Powell Excerpt: IOER Adjustment

     WASHINGTON (MN) - The following is a response of Federal Reserve Chairman

Jerome Powell to a question from a reporter at his press conference following

Wednesday's Federal Open Market Committee meeting.

     Question: Hi, I'm Jean Yung with Market News International. Can you give us

an update on the technical adjustment and implementing monetary policy that the

Fed made earlier this year when it decoupled the interest on excess reserve

rates from the upper bound of the target range, and have you been happy with

that adjustment and do you see the need to make another such adjustment in the

near future?

     Powell: We said we would use our tools to assure that the federal funds

rate trades within the target range and the principle tools we use have been

excess reserves and at the bottom end reverse repo facility. 

      In June when we raised rates, we raised the interest on excess reserves by

20 basis points and raised the range by 25, and that moved federal funds sort of

back into the range. It worked. It was successful. The federal funds rate traded

well within the range, in the 190s. We may do that again. We have our tools, and

we will use them.

     We think it's principally a function just of a number of things.

Particularly high treasury supply, which is showing up in repo rates and showing

up in fed funds as well. We don't see it as a big problem. We see it as a

problem we can address with our tools, and we'll use them if we have to.

--MNI Washington Bureau; +1 (973) 494-2611; email: harrison.clarke@marketnews.com

[TOPICS: MMUFE$,M$U$$$]