Q: Is Fed as well positioned for a future.......>

FED: Q: Is Fed as well positioned for a future recession as it has been in past

recessions?

- A: Typical post-war recession, Fed has cuts rate 5 perc. pt. or so. But the

new normal is lower rates, inflation, growth...so knowing that, the basic reason

we are having this public review of our monetary policy is to see if there are

ways that we can alter our strategy/tools to make them more effective. Fiscal

policy important too as part of the counter-cyclical reaction.

- Q: Did you anticipate repo rate problems?

- A: We have more liquidity in system now...but mainly held in reserves. We're

trying to find the level where reserves became scarce, really no way to know. We

learned in Sep that we needed to make sure that reserves didn't go under that

level in mid-Sep. What we're doing now is technical; a process that doesn't

really have any implications for the economy.