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     WASHINGTON (MNI) - The following is the portion of a transcript from
Federal Reserve Chairman Jerome Powell's press conference after the FOMC meeting
Wednesday:
     Q: Do you have any greater sense of what was going on with the repo market
starting in September it seemed to be whether it was a one-off event to tie
around tax payments and debt settlement or whether there is a more enduring
issue going on with the market, more structural forcing that are basically
gumming up the repo sector?
     A: Yeah, as for those forces, so as we indicated we would undertake a
serious review of that question and look at both regulations around also
supervisory practices and we'd be prepared to adjust those in ways that might
encourage liquidity to flow more easily in the system as long as it didn't
undermine safety and soundness. We did that and did a ton of work. I don't have
anything to announce here today, but I feel good about what we've learned there.
I think you mention other factors. We will be announcing our findings -- I'm not
going to give you a time but we're well along in that assessment at this time. I
think we also found out though that the level of reserves that we need in the
system to conduct our operations without frequent resort to open market
operations was higher than we had thought and it was higher than others had
thought too. We learned that we can't let reserves -- we shouldn't let reserves
go below 1.5 trillion, roughly, the level of early September at any point, and
that means that reserves will move in a range over the course of the year that
will be substantially higher than 1.5, but they won't ever go below. So 1.5 is
not a target level but the bottom of a range in which reserves will be expected
to move.
--MNI Washington Bureau; +86 (10) 8532-5998; email: ryan.hauser@marketnews.com
[TOPICS: MMUFE$,M$U$$$]

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