Powell Says Fed Balance-Sheet Process to Be Transparent and Smooth

The transcript outlines a plan to slow the runoff of assets starting in May and cease it by September. Reserve balances may remain above the required level, and asset holdings will be kept constant for a time. Gradual increases in currency and liabilities will lead to a slow decline in reserve balances. Once reserves stabilize, securities holdings will rise based on demand. The committee will address remaining normalization topics, focusing on a portfolio mainly of Treasury securities.

What is the main reason for slowing down the asset runoff starting in May?

• To reduce the currency in circulation

• To decrease the demand for securities

• To increase reserve balances significantly

• To ensure a smooth and predictable process

What might happen to reserve balances in September according to the plan?

• They will be below the required level

• They will be exactly at the required level

• They may still be above the required level

• They will be significantly reduced

What will cause a gradual decline in reserve balances?

• Ongoing gradual increases in currency and non-reserve liabilities

• A decrease in currency and non-reserve liabilities

• A rapid increase in securities holdings

• A sudden drop in demand for reserves

Under what condition will securities holdings begin to rise again?

• When reserve balances are too high

• When the committee decides reserves should not decline further

• When currency levels drop

• When non-reserve liabilities decrease

What is the committee's long-stated intention regarding the portfolio composition?

• To focus on short-term securities only

• To diversify into various asset classes

• To maintain a portfolio mainly of corporate bonds

• To return to a portfolio consisting mainly of Treasury securities