Powell Says Fed Will Eventually Slow the Pace of Bill Purchases

The transcript discusses the smooth operation of Treasury bills and repo operations, which have ensured ample reserves and controlled the federal funds rate. A technical upward adjustment to administered rates was made to stabilize the federal funds rate. As reserves build, the role of active repo operations will decrease, with adjustments planned for the first half of the year. The transition will include smaller reserve management purchases, maintaining ample reserves without active repos. The balance sheet will expand gradually, reflecting currency demand. These measures support monetary policy implementation without changing its stance, with ongoing monitoring of money markets.

What was the purpose of the small upward adjustment to administered rates?

• To ensure the federal funds rate remains within the target range

• To decrease the supply of reserves

• To increase the federal funds rate beyond the target range

• To respond to a decrease in currency demand

What is the Federal Reserve's plan for repo operations in the first half of the year?

• To increase the frequency of repo operations

• To stop repo operations immediately

• To gradually adjust the size and pricing of repo operations

• To maintain the current level of repo operations indefinitely

By when does the Federal Reserve expect the underlying level of reserves to reach ample levels?

• By the end of the year

• In the first quarter of the year

• By the beginning of the next year

• In the second quarter of the year

What will happen to the balance sheet as the Federal Reserve transitions to smaller reserve management purchases?

• It will contract significantly

• It will remain unchanged

• It will decrease rapidly

• It will expand gradually

What is the main goal of the technical measures discussed in the transcript?

• To change the stance of monetary policy

• To support the efficient implementation of monetary policy

• To reduce the demand for currency

• To increase the volatility in money markets