MNI TRANSCRIPT: Powell on Balance Sheet Operations, Repos

     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: Just wanted to ask about how your balance sheet operations and temporary

repos, how they affect the system and who they're helping? Clearly they're

mostly designed, as you said, to get or keep the Fed Funds rate in the range

you're looking for, but certainly the repo market is used by hedge funds and

other Wall Street institutions, and so how would you explain just sort of

mainstream why you're doing all of this for that market and how would you

address criticism that it is helping mostly Wall Street along with everything

else?

     A: Well, let me just stress that we have a very specific and important

reason for caring about money market operations, generally, and that is just

that our monetary policy decisions are transmitted through the financial markets

through the money markets into other financial markets and into broader

financial conditions, so we care that money markets are operating smoothly, and

they stopped operating smoothly briefly back in September, and so this is a

one-time thing we're doing to adjust the level of reserves to money markets will

be able to operate smoothly on an ongoing basis. Repo markets are important

because that's where treasury securities, the purchase of treasury securities,

which is the way, you know, part of the way the federal government is funding

its operations, it's the way those are financed. So these are largely treasury

securities that have been purchased by dealers for distribution to and buyers to

a substantial extent, that's what's going on in the treasury repo market, so

it's just financing for that. Now, again, we don't -- that activity is a market

activity that we're not looking to eliminate volatility or protect anybody from

volatility at all. What we care about is volatility in the repo market can

affect the transmission of our policy decisions to Federal Funds Rate and that

really is important for the public.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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