MNI TRANSCRIPT: Fed to Announce Repo Review "At Some Time"

     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

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