Q&A continues: Q: [the 'is bill buying QE'......>

FED: Q&A continues:

Q: [the 'is bill buying QE' question] A lot of balance sheet expansion over 3

months. Fed's purchases impacting the stock market?

- A: We need to continue purchases so reserves don't go below $1.5trn. Our

intention for these adjustments is just to raise the level of reserves and that

is our sole intention. Have pointed out difference between this and LSAP. In

terms of what affects markets, very hard to say with any precision at any time,

you know our intention - to return reserves to an ample level (i.e. 2nd

quarter), beyond that we believe we can gradually reduce them, and move from

repo. We're prepared to adjust the details of this plan based on conditions.

Q: On wage growth remaining relatively weak

- A: Labour market continues to be strong. Think we have learned a lot of good

things, including that there is a lot of room to run. Re wages, a bit surprising

given low unemployment. May be that NAIRU is still lower than we think, labour

market not as tight given just 3.5% unemployment; could be more participants

coming into the labour force, maybe holding down wages.