Central Banks

Wednesday, March 20, 2019 - 15:20

Powell Excerpt: Uncertain On Balance Sheet After September 30


WASHINGTON (MNI) - 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: Hi, Jean Yung from Market News. I wanted to ask, at what point do you expect to begin to allow the balance sheet to grow slowly again? How will you make that decision?

Powell: As I mentioned, the balance sheet runoff will stop at September 30. If it is our view at that time that we are still a ways away from, a ways above a balance sheet that is what we need to officially and effectively conduct monetary policy, at that time, we will hold the balance sheet constant, and then what will happen is organically very gradually currency and other nonreserve liabilities will grow and reserves will shrink. The question you are asking is how long will that go on. The truth is we don't know. We don't really know that we will move past September 30 that the legal of reserve demand is something that we have put a lot of effort and time into creating estimates based on market intelligence and surveys. The truth is we don't know. It may evolve over time. We will just have to see. I wouldn't want to put a time out there for that. But so I'll just leave it there.

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

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