Fed's Williams Says Bank Reserves Nearing Desired Level

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00:00Looking forward, the next step in our balance sheet strategy will be to assess when the level

00:04of reserves has reached ample. It will then be time to begin the process of gradual purchases

00:09of assets that will maintain an ample level of reserves as the Fed's other liabilities grow

00:15and undermine demand for reserves increases over time. Such reserve management purchases

00:21will represent the natural next stage of the implementation of the FOMC's

00:24ample reserve strategy and in no way represent a change in the underlying stance of monetary policy.

00:31Determining when we are at ample reserves is an inexact science. I am closely monitoring

00:37a variety of market indicators related to the Fed funds market, the repo market,

00:41and payments to help assess the state of reserve demand conditions. Based on recent sustained repo

00:48market pressures and other growing signs of reserves moving from abundant into ample,

00:52I expect that it will not be long before we reach ample reserves.