Central Banks

Wednesday, March 20, 2019 - 15:20

Powell Excerpt:Have Not Made Decision On Bal Sheet Composition


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: The Fed has been allowing the average maturity of securities in its bond portfolio to lengthen. Is this aimed at consciously, aimed at flattening the yield curve? And is that going to be part of the Fed's longer run balance sheet strategy? And if flattening the yield curve is a conscious long-term strategy, are you concerned about the side effect of the heightening concerns about a flatter or inverted yield curve being a harbinger of recession.

Powell: The basic answer to the question is no. We are, the decision about the maturity composition of the fed's balance sheet in the longer run lies ahead of us. We have not made that decision. We haven't begun to have the serious series of discussions over a series of meetings to grapple with that. That I think will be something we turn to reasonably soon. But I think it will take some time. It is a consequential decision and one that needs some thought. We have had a lot of balance sheet discussions as I mentioned over the last four meetings, but this is the next big one, big decision that we will face. I think we are not going to be rushed to resolve it but we will turn to it soon.

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

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