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Key Support Remains Exposed


Pullback Extends, But Still Looks Corrective in Nature


FED Remains in Play Post-NFP/ISM Data

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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:

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