Q&A begins: Q: Change in statement inflation....>

FED: Q&A begins:

Q: Change in statement inflation language - FOMC sees 2% baked in the cake, or

looking to informal makeup strategy?

- A: Goal was to avoid possible misinterpretation. [Cites debate over December

statement use of the word 'near']. We thought about that during the

inter-meeting period, thought we should send a clear signal we weren't

comfortable with inflation running persistently below 2%. We wanted to cement

our commitment to symmetrical target; that we're not satisfied with it running

under 2%.

Q: How many reserves are ample? How are you thinking about it?

- A: A few things about repo. After September we took decisive action; markets

working smoothly since then. The purpose has been to ensure smooth transmission

of monetary policy, not to eliminate all volatility. These operations have been

successful. We will know when these adjustments have run their course when

reserves are at a durable level, when we no longer need temporary operations.