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Powell Asked On The Banking Sector Outlook Affecting Balance Sheet Plans

FED
  • Q: How might the outlook for the banking sector affect your balance sheet plans?
    • A: We'll be watching carefully - one reason we're slowing down runoff is to avoid turbulence - I wasn't thinking specifically about banking sector turbulence. This is our second time doing this, will pay attention to those things that happened where we ended up in a short reserve situation. Wasn't so much in the banking system, vs where Fed funds were trading to administered rates, etc.
    • Once overnight repo facility stabilizes at zero, as the balance sheet shrinks we should expect reserves to decline pretty close to dollar for dollar with that.

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