MNI TRANSCRIPT: Powell on QE

     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: You said not QE, but 390 billion dollars over 5 months which is a lot to

expand the balance sheet, and I guess I'd ask one more time on Nick's question,

is there a number that you have in mind? Secondly, a lot of people in the market

are sort of concerned that it looks like QE and they're trading that way. Are

you concerned that the market is embracing this like a QE Program and that the

rise in the stock market is linked to it and you may then experience something

of a taper tantrum the way Chairman Bernanke did when he tried to roll it off?

     A: So I'll repeat that we think that we need to continue purchases until

reserves are at a level which they will not go below 1.5 trillion dollars,

roughly, during the course of the calendar year and we know that the TGA will

move up and down to that, so it will be much higher than that some of the time,

but that's kind of the number and we think we'll reach that some time in the

second quarter. That's our estimate, but we will know it when we get there.

We'll know it because we'll be able to control the Federal Funds Rate without

use of -- without active use, without ongoing use of open market operations. You

know, our intention of these, or for these adjustments is just to raise the

level of reserves and to allow us to conduct monetary policy in an efficient and

effective manner and that is our sole intention. I pointed out more than once

the differences between this and the large-scale asset purchase programs and

we've been over that. In terms of what affects markets, you know, I think many

things affect markets. It's very hard to say what is affecting markets, but what

I can tell you is you know our intention, it's to return reserves to an ample

level, and we expect that to happen during the second quarter, and our plan as

we do that is as those purchases get to that level, we believe we can gradually

reduce and we believe we can also gradually reduce repo as we reach an ample

level, as we're satisfying demand now more from underlying reserves from bill

purchases rather than repo. And again, last thing I'll say is we're prepared to

adjust the details of this plan, as we've shown ourselves willing to do

depending on conditions.

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

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