record highs. during my recent trip to upstate new york, i saw first - hand some of the positive developments in rochester and buffalo. after undergoing a prolonged period of economic transformation and reinvention, rochester ’ s economy is now more diverse and dynamic than ever before. meanwhile, the growth in buffalo was striking. the numbers show a dramatic uptick in construction bis central bankers ’ speeches employment, and the visual evidence of development was widespread. i was especially impressed with the downtown and waterfront areas, as well as the new solarcity factory — all of which looked dramatically different than when i visited the area less than two years ago. both of these places are well positioned for future success. on the other hand, the employment recovery has been slow to take hold in both northern new jersey and the lower hudson valley, where jobs are still not back to their pre - recession peak despite employment growing steadily. for northern new jersey, this lag is due, in part, to a stall in the growth of jobs in professional and business services. but the education and health sectors continue to add jobs, and construction employment is seeing a rebound. i also saw a number of bright spots on my visit to the area a few months ago. one was jersey city, which is leveraging its proximity to new york city to attract residents and jobs. another was newark, where i saw signs of downtown development, including teacher ’ s village, a mixeduse community of teachers with new schools, housing and retail businesses. but pockets of weakness remain. for example, in upstate new york, binghamton has had no meaningful rebound in employment. although the u. s. virgin islands and puerto rico remain in a deep economic slump, employment appears to have steadied in both places in recent months. however, puerto rico ’ s weak economy coupled with a fiscal crisis means its economic outlook remains uncertain as it struggles to address its unique set of problems. now, i ’ d like to turn things over to one of our regional economists, jim orr, who will provide a more detailed presentation of economic conditions across our region. bis central bankers ’ speeches

activity is now quite distant from zero, in comparison to the period before liftoff. ( figure 3 ) shows a similar presentation for the triparty repo market, similarly revealing that traded rates are now consistently well above the zero bound and largely above or at the on rrp offer rate. certain features of the financial system likely provide support to interest rates near zero. these include the availability of physical cash and a behavioral aversion by some money market investors to investing at negative rates. they also encompass certain unique features of money markets in the united states, such as legal and regulatory incentives applicable to money market funds and the inability of the federal reserve to remunerate deposits held by governmentsponsored enterprises. accordingly, when we were at the zero lower bound, we weren ’ t able to rule out the possibility that initial increases in the policy target might not translate one - for - one into increases in money market rates, as reduced uplift from the zero lower bound could have offset some of the policy tightening. in addition, one might have also worried that various money markets might not move together as rates rise, meaning that, for example, a larger spread might emerge between secured and unsecured rates, or between overnight and term instruments, than had historically been the case. i will discuss some evidence on these issues later on. the second development, in october 2016, was the entry into force of new sec rules for money market funds. these new rules require, among other things, a floating net asset value for institutional prime money market funds, provide for liquidity fees and redemption gates for prime funds, and establish more stringent rules for portfolio diversification and financial reporting for all money market funds. 11 many of these reforms are aimed at least in part at enhancing financial stability, and in particular at addressing the potential for runs on prime funds to intensify financial stress. they could also make prime funds, which can hold a broad spectrum of money market 3 / 13 bis central bankers'speeches assets, less attractive to investors who desire an investment opportunity with a fixed net asset value or who are concerned about redemption fees or gates. our contacts in the money market fund industry could foresee, based on their own business plans and discussions with their clients, that these reforms would lead to a substantial shift in money market fund assets. substantial amounts were expected to come out of prime funds and into government - only funds, which generally hold treasury securities, repo against treasury collateral, or similar ultra - low