MNI TRANSCRIPT: Powell on Forward Guidance, Credit Facilities

     WASHINGTON (MNI) - The following is the portion of a transcript from

Federal Reserve Chairman Jerome Powell's press conference Wednesday:

     Q: You didn't firm up your guidance on interest rates at this meeting.

Given the risks that you outlined, under what circumstances would you strengthen

the fed's commitment to keep rates at the lower bound, and is there any danger

to delaying that pledge. On the credit facilities, what kind of demand are you

expecting for the programs that were set up under the cares act and are you

expecting them to rapidly reach capacity like the PPP plan did?

     A: On the first, as I mentioned, we moved very quickly, aggressively. We

were the first to return to the effective lower bound where we are now. We got

there essentially right away. We think that is the right place to be. We think

if you look at surveys, you look at market pricing, the market expects us to be

there for a good while, and that is appropriate. It's not as though the market

is pricing in a near term lift off or anything like that. Let me just say we are

going to not be in any hurry to withdraw these measures or lift off. We are

going to wait until we are quite confident that the economy is well on the road

to recovery. We don't see, we see our current stance, current guidance and the

same thing about asset purchases, we see them as appropriate. I've mentioned a

couple times that we have done a lot of thinking about what monetary policy

might look like over coming months, and that would depend on where we are in a

range of potential economic scenarios. We were thinking about that all the time.

But right now, for now, we think our current stance is appropriate. We made no

change in it today.

     Second question was, the thing about our facilities is treasury still has

plenty of equity. We have said that if demand for our facilities is greater than

we have estimated, then we will expand them. We have the ability to do that. It

won't be the way the paycheck protection program is where there is a specific

amount allocated appropriated for it, and then there is no more money. That will

be unlikely to happen unless we exhaust treasury's equity and we are a long way

from doing that. The second thing I would say, you have all seen this, is when

we announce these facilities, I mentioned in my remarks it's not just the actual

lending we do. We build confidence in the market, and private market

participants come in, and many companies that would have had to come to the fed

have now been able to finance themselves privately, since we announced the

initial term sheet on these facilities. That is a good thing. Companies are out

there financing, out there raising liquidity. We haven't made any corporate

loans, in those facilities. We made short term money market loans but we haven't

made any of them, and yet there is tremendous amount of financing going on. That

is a good thing. For that reason, the ultimate demand for the facilities is

quite difficult to predict because there is this announcement effect that really

gets the market functioning again. Of course we have to follow it through

though. And we will follow through to validate that announcement effect.

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

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