MNI TRANSCRIPT: Powell on Trade and Monetary Policy

     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: So... about a month ago -- Edward Lawrence from Fox Business Network,

you said there's no precedent to integrate trade uncertainty in the monetary

policy, in the last few weeks, have you figured out how to incorporate this

level of trade uncertainty into monetary policy going forward? You talked about

uncertainty many times today.

     A: My point really was to start that trade policy is not the business of

The Fed. It's the business of Congress and the administration, but... so... why

are we talking about it? We're talking about it because anything that affects

the achievement of our goals can, in principle, be something that monetary

policy should take into consideration and our discussions and the research we

have suggests the trade policy is something that's weighing on the outlook.

So... I pointed out, in, in recent remarks that the thing we can't address,

really... is what businesses would like, which is a settled roadmap for

international trade. We can't do that. We don't have that tool. But... we do

have a very powerful tool which can counteract weakness to some extent, by

supporting demand through sound monetary policy. We think our policy -- our

policy tools support economic activity through fairly well-understood channels.

By reducing interest burden and encouraging customer purchase of durables,

homes, other sensitive items, by creating broadly, more accommodative financial

conditions which supports spending and also by boosting household and business

confidence. So... you know... I don't want to be hard to say that our tools

don't have an effect, they do, but... I was making the point that there's a

piece of this that we really can't address. I think, yeah, it's a challenge,

there's no simple bottom line answer where I can say yes, I've got it for you

here, but what it amounts to is this. What you see is probably the kind of

volatility that's typical of an important, complex, ongoing negotiation. I think

what we need to do is try to look through the volatility and react to the

underlying forces, the underlying things that are happening, that are relevant

to our mandate. We have nothing to do with setting trade policy or negotiating

trade agreements, we're supposed to be reacting on behalf of the American

economy to support maximum employment and stable prices. We need to look through

what's a pretty volatile situation. That means, not overreacting quickly, it

means not underreacting too. That's what we're trying to do. And... you know,

I'd say, the outlook is positive in the face of these cross winds we've felt

and... so... to some extent, that's -- I do believe, there are shifting to a

more accommodative stance over the year is one of the reasons why the outlook

has remained favorable.

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

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