Powell Excerpt: Powell On IOER Adjustments

     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: Jean Yung with Market News. If the fed funds rate keeps rising, do you

see room for another IOER adjustment, and then can you speak to any other

strategies or tools that might be useful for keeping a ceiling on short-term

interest rates?  There have been other ideas floated like the standing repo

facility and targeting a different benchmark rate.

Powell: If we need to, and as needed, we will use our tools to keep the federal

funds rate somewhere in the target range. We'll do that. Don't expect to need to

do it again but we don't know. I mean, with the balance sheet is now, the size

of it is going to be driven by financial stability. Principal reserves as I

mentioned and we're right at getting to know more and more what the real demand

for reserves is over the next few months. There is no template, no roadmap. We

just have to do it and that's why we're moving to very gradually. That's why we

tapered the rolloff to only 15 billion in they are rei rates a month. I guess

effectively today we're cutting the rolloff rates for treasury in half just

because we want to take our time and move gradually here. So, that's that.

In terms of other tools, we are actually, I'm sure at an upcoming meeting, we

will be looking at the idea of a repo facility. I don't have any presupposition

that it's something we would do but we'll be taking a look at it as a possible

addition to our toolbox again. I wouldn't say, it would just be in a way for us

to do what we do, which is to do a deep dive on it. Think carefully about it.

Look at the pros and cons. Look at the different possible ways to do it and then

go and think about it for a little while and then probably come back and make a

decision but that's something we'll do at an upcoming meeting, I would imagine.

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

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