MNI TRANSCRIPT: Powell on Rate Cut Effects

     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:  How much can you talk about the mechanism which the two rate cuts would

affect the real economy?  And how much, to what extent, will it offset the

negative effects of a trade uncertainty and tensions? 

     A: So... in terms of how, how our rate cuts will affect the real economy,

first, we think monetary policy works with, as Friedman said, long and variable

lags.  So... I think the real effects will be felt over time. 

   But... you know... we, we think that lower interest rates will reduce

interest burden for borrowers.  So... that interest sensitive things like

housing and durable goods and other things like that, cars... can support

purchases of those.  

   Again, broadly, more accommodative financial conditions, higher asset prices,

the models and data show that's another powerful channel.  I also think there's

a confidence channel.  You see, you see household and business confidence turn

up when financial conditions become more accommodative.  I think, through all of

those channels, monetary policy works. 

   It isn't, you know... precisely the right tool for every single, possible,

negative thing that can happen to the economy, but... nonetheless, it broadly

works and you know, we're going to use the tool we have and... if it comes to

it, we'll use all of our tools. 

   So... that's how we think it works.  And... how we think it's working. It's

very hard to say... you know... it's -- it's tough to say, we'll, we'll use our

tools to offset negative -- that's really the job of monetary policy, to the

extent it can, to offset you know... things that drive us away from maximum

employment and stable prices.  

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

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