Powell Excerpt: Balance Sheet Runoff Has Been Smooth

     WASHINGTON (MN) - The following is a response of Federal Reserve Chairman

Jerome Powell to a question from a reporter at his press conference following

Wednesday's Federal Open Market Committee meeting.

Question: Hi, Heather Long from "The "Washington Post"."  Today the fed lowered

its expectations for interest rate increases.  Given that, I'm wondering if the

Fed has had any discussion of altering the course of balance sheet normalization

and if you could give us any another of what would allow the FMOC to alter that

balance sheet in 2019.

Powell: Sure.  If you go back some years, I think people working at the fed in

2013 and '14, took away the lesson that the markets could be very sensitive to

news about the size of the balance sheet, the pace of asset purchasessen athe

pace of run cough and that thing.  We thought carefully about how to normalize

policy and came to the view that we would effectively have the balance sheet run

off on automatic pilot and use monetary policy, rate policy to adjust to

incoming data.  I think that has been a good decision.  I think that the runoff

of the balance sheet has been smooth and has served its purpose and I don't see

us changing that.  And I do think that we will continue to use monetary policy,

which is to say rate policy as the active tool of monetary policy.

--MNI Washington Bureau; +1 (973) 494-2611; email: harrison.clarke@marketnews.com

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