Powell Says RRP Doing Its Job

Q: Re reverse repo, are you concerned about the level of money flowing into the facility and do you believe the Fed's rate move today will have any impact. And do you think that Fed asset purchases are taking too many safe assets out of the market, and creating dislocations in the money markets?

• A: On the facility, we think it's doing its job, doing what it's supposed to do which is provide a floor under money market rates and keep the federal funds rate well within its range. We are not concerned with it. The treasury general account is shrinking and bill supply is shrinking. There is downward pressure on rates, and that facility is doing what it's supposed to do.
• Re the rate move impact: It could have some impact. I think we will have to see empirically but it's designed to keep the federal funds rate within the range, and I do think it could have some effect on broader money market conditions as it relates to the very low rates and downward pressures.
• Re whether it will lower uptake in ON RRP: You would think that it would but we have to see. It's possible that that would not be the case. That is going to be a empirical question.