Participants expected the recent solid growth in consumer spending to continue, supported by further gains in employment and income, increased household wealth resulting from higher asset prices, and high levels of consumer confidence. The 1, millimetres February , about exhibitors and visitors on the Finanz in Zurich. Research revealed that infrastructure and the social environment are essential factors in improving a city's appeal to bicycle traffic. Zürich airport is served by more than 60 passenger airlines from around the world.
The famous illuminated manuscript — described as "the most beautifully illumined German manuscript in centuries;"  — was commissioned by the Manesse family of Zürich, copied and illustrated in the city at some time between and Producing such a work was a highly expensive prestige project, requiring several years work by highly skilled scribes  and miniature painters, and it clearly testifies to the increasing wealth and pride of Zürich citizens in this period.
On 1 May , the citizens of Zürich had to swear allegiance before representatives of the cantons of Lucerne , Schwyz , Uri and Unterwalden , the other members of the Swiss Confederacy. Thus, Zürich became the fifth member of the Confederacy, which was at that time a loose confederation of de facto independent states.
Zürich was the presiding canton of the Diet from to This authority was the executive council and lawmaking body of the confederacy, from the Middle Ages until the establishment of the Swiss federal state in Zürich was temporarily expelled from the confederacy in due to a war with the other member states over the territory of Toggenburg the Old Zürich War. Neither side had attained significant victory when peace was agreed upon in , and Zürich was readmitted to the confederation in Zwingli started the Swiss Reformation at the time when he was the main preacher in the s, at the Grossmünster.
He lived there from until his death in The Zürich Bible , based on that of Zwingli, was issued in The Reformation resulted in major changes in state matters and civil life in Zürich, spreading also to a number of other cantons.
Several cantons remained Catholic and became the basis of serious conflicts that eventually led to the outbreak of the Wars of Kappel. During the 16th and 17th centuries, the Council of Zürich adopted an isolationist attitude, resulting in a second ring of imposing fortifications built in The Thirty Years' War which raged across Europe motivated the city to build these walls.
The fortifications required a lot of resources, which were taken from subject territories without reaching any agreement. The following revolts were crushed brutally. In , Zürich proclaimed itself a republic, shedding its former status of a free imperial city. Zürich lost control of the land and its economic privileges, and the city and the canton separated their possessions between — In , the city had to yield to the demands of its urban subjects, following the Züriputsch of 6 September.
Most of the ramparts built in the 17th century were torn down, without ever having been besieged, to allay rural concerns over the city's hegemony. Zürich was the Federal capital for —40, and consequently, the victory of the Conservative party there in caused a great stir throughout Switzerland.
But when in the Radicals regained power at Zürich, which was again the Federal capital for —46, Zürich took the lead in opposing the Sonderbund cantons.
Following the Sonderbund war and the formation of the Swiss Federal State, Zürich voted in favour of the Federal constitutions of and of The enormous immigration from the country districts into the town from the s onwards created an industrial class which, though "settled" in the town, did not possess the privileges of burghership , and consequently had no share in the municipal government.
First of all in the town schools, hitherto open to "settlers" only on paying high fees, were made accessible to all, next in ten years' residence ipso facto conferred the right of burghership, and in the eleven outlying districts were incorporated within the town proper. Extensive developments took place during the 19th century.
From , the Spanisch-Brötli-Bahn , the first railway on Swiss territory, connected Zürich with Baden , putting the Zürich Hauptbahnhof at the origin of the Swiss rail network. The present building of the Hauptbahnhof the main railway station dates to Industrialisation led to migration into the cities and to rapid population growth, particularly in the suburbs of Zürich.
The Quaianlagen are an important milestone in the development of the modern city of Zürich, as the construction of the new lake front transformed Zürich from a small medieval town on the rivers Limmat and Sihl to an attractive modern city on the Zürichsee shore, under the guidance of the city engineer Arnold Bürkli. In , the twelve outlying districts were incorporated into Zürich, including Aussersihl, the workman's quarter on the left bank of the Sihl, and additional land was reclaimed from Lake Zürich.
Zürich was accidentally bombed during World War II. The blue and white coat of arms of Zürich is attested from and was derived from banners with blue and white stripes in use since The first certain testimony of banners with the same design is from The coat of arms is flanked by two lions. The red Schwenkel on top of the banner had varying interpretations: For the people of Zürich, it was a mark of honour, granted by Rudolph I.
Zürich's neighbours mocked it as a sign of shame, commemorating the loss of the banner at Winterthur in Today, the Canton of Zürich uses the same coat of arms as the city. The previous boundaries of the city of Zürich before were more or less synonymous with the location of the old town.
Two large expansions of the city limits occurred in and in when the city of Zürich merged with many surrounding municipalities, that had been growing increasingly together since the 19th century.
Today, the city is divided into twelve districts known as Kreis in German , numbered 1 to 12, each one of which contains between one and four neighborhoods:. Most of the district boundaries are fairly similar to the original boundaries of the previously existing municipalities before they were incorporated into the city of Zürich. The City Council Stadtrat constitutes the executive government of the City of Zürich and operates as a collegiate authority.
It is composed of nine councilors, each presiding over a department. Departmental tasks, coordination measures and implementation of laws decreed by the Municipal Council are carried out by the City Council. The regular election of the City Council by any inhabitant valid to vote is held every four years. Stadtpräsident in is elected as such by a public election by a system of Majorz while the heads of the other departments are assigned by the collegiate.
Any resident of Zurich allowed to vote can be elected as a member of the City Council. The executive body holds its meetings in the City Hall German: Stadthaus , on the left bank of the Limmat. The building was built in in Renaissance style. The Gemeinderat of Zürich for the mandate period of — The Municipal Council Gemeinderat holds the legislative power. The Municipal Council decrees regulations and by-laws that are executed by the City Council and the administration.
The sessions of the Municipal Council are held in public. Unlike those of the City Council, the members of the Municipal Council are not politicians by profession but are paid a fee based on their attendance.
Any resident of Zürich allowed to vote can be elected as a member of the Municipal Council. The legislative body holds its meetings in the town hall Rathaus , on the right bank of the Limmat opposite to the City Hall Stadthaus. The last election of the Municipal Council was held on 4 March for the mandate period of — The next four most popular parties were the SVP In the federal election, a total of , voters were cast, and the voter turnout was Zürich is partnered with two sister cities: Kunming and San Francisco.
The Old Town stretches on both sides of the Limmat , which flows from the lake, running northwards at first and then gradually turning into a curve to the west.
Today the incorporated city stretches somewhat beyond the natural confines of the hills and includes some districts to the northeast in the Glatt Valley Glattal and to the north in the Limmat Valley Limmattal. The boundaries of the older city are easy to recognize by the Schanzengraben canal. This artificial watercourse has been used for the construction of the third fortress in the 17th and 18th centuries. The municipality of Zürich has an area of The area includes a section of the northern Swiss Plateau.
The banks of the Limmat constitute the densest part of the city. The river is oriented in the southeast-northwest direction, with the flat valley floor having a width of two to two to three kilometres 1.
The partially channeled and straightened Limmat does not flow in the central part of the valley, but always along its right northeastern side. On its west side, the Limmat valley is flanked by the wooded heights of the Albis chain, which runs along the western border. Its summit can be reached easily by the Uetlibergbahn.
From the platform of the observation tower on the summit, an impressive panorama of the city, the lake, and the Alps can be seen. The northeast side of the Limmat valley includes a range of hills, which marks the watershed between the Limmat and the Glatt. From the northwest to the southeast, the height of the mostly wooded knolls generally increases: The northernmost part of the municipality extends to the plain of the Glatt valley and to the saddle which makes the connection between the Glattal and Furttal.
Also, a part of the Katzensee nature reserve and the Büsisee, both of which are drained by the Katzenbach to Glatt, belong to the city. Zürich has, depending on the definition used, an oceanic climate Köppen Cfb with four distinct seasons. Decisive for the climate of Zürich are both the winds from westerly directions, which often result in precipitation and, on the other hand, the Bise east or north-east wind , which is usually associated with high-pressure situations, but cooler weather phases with temperatures lower than the average.
The Foehn wind , which plays an important role in the northern alpine valleys also has some impact on Zürich. On average there are The average high temperature in July is The highest recorded temperature in Zürich was Spring and autumn are generally cool to mild, but sometimes with large differences between warm and cold days even during the same year.
The highest temperature of the month March in was on the 20th at During the months April until September the sun shines between and hours per month. The 1, millimetres Roughly about every third day you will encounter at least some precipitation, which is very much a Swiss average. During the warmer half of the year and especially during the three summer months, the strength of rainfall is higher than those measured in winter, but the days with precipitation stays about the same throughout the year in average 9.
October has the lowest number 9. There is an average of The city of Zürich is among the world-leaders in protecting the climate by following a manifold approach. In November  the people of Zürich voted in a public referendum to write into law the quantifiable and fixed deadline of one tonne of CO 2 per person per annum by This forces any decision of the executive to support this goal, even if the costs are higher in all dimensions.
Some examples are the new disinfection section of the public city hospital in Triemli Minergie-P quality — passive house [ clarification needed ] , the continued optimisation and creation of public transportation, enlargement of the bicycle-only network, research and projects for renewable energy and enclosure of speed-ways [ clarification needed ].
The areas surrounding the Limmat are almost completely developed with residential, industrial, and commercial zones. The sunny and desirable residential areas in the hills overlooking Zürich, Waidberg and Zürichberg, and the bottom part of the slope on the western side of the valley on the Uetliberg, are also densely built.
The "green lungs" of the city include the vast forest areas of Adlisberg, Zürichberg, Käferberg, Hönggerberg and Uetliberg. Major parks are also located along the lakeshore Zürichhorn and Enge , while smaller parks dot the city. Larger contiguous agricultural lands are located near Affoltern and Seebach.
Of the total area of the municipality of Zürich in , without the lake , Public transport is extremely popular in Zürich, and its inhabitants use public transport in large numbers. When adding frequency, which in Zürich can be as often as seven minutes, it does become the densest across all dimensions. In addition, the public transport network includes boats on the lake and river, funicular railways and even the Luftseilbahn Adliswil-Felsenegg LAF , a cable car between Adliswil and Felsenegg.
Tickets purchased for a trip are valid on all means of public transportation train, tram, bus, boat. The Zürichsee-Schifffahrtsgesellschaft commonly abbreviated to ZSG operates passenger vessels on the Limmat and the Lake Zürich, connecting surrounding towns between Zürich and Rapperswil.
Zürich is a mixed hub for railways, roads, and air traffic. Zürich Hauptbahnhof Zürich HB is the largest and busiest station in Switzerland and is an important railway hub in Europe.
There are between , and , commuters daily making use of this central network node — a significant figure in comparison to Zürich's population. With regard to the number of trains daily entering and leaving a single railway station, Zürich HB is the world's most frequently served railway station, with trains every day.
Three of them belong to the ten most frequented railway stations in Switzerland: Stadelhofen , Oerlikon , Altstetten , Hardbrücke , and Enge. Zürich Airport is located less than 10 kilometers 6. Zürich Airport has its own railway station, which is located underground. It is directly connected to Zürich and most of the major Swiss cities. Zürich airport is served by more than 60 passenger airlines from around the world.
It is also served by one cargo airline and is a hub for Swiss International Air Lines. There is also an airfield in Dübendorf. The A1 , A3 and A4 motorways pass close to Zürich.
The A1 heads west towards Bern and Geneva and eastwards towards St. Gallen ; the A4 leads northwards to Schaffhausen and southwards to Altdorf connecting with the A2 towards Chiasso ; and the A3 heads northwest towards Basel and southeast along Lake Zürich and Lake Walen towards Sargans. In , the city council launched a program to improve the city's attractiveness for bicycle traffic. The so-called "Masterplan Velo"  is part of the superordinate framework Stadtverkehr which shapes the future of the different means of transport.
Research revealed that infrastructure and the social environment are essential factors in improving a city's appeal to bicycle traffic. First, the modal share of bicycle traffic should be enhanced to twice the value of by Second, cyclists' safety should be improved to lower the overall accident risk. Third, cycling should be established as an everyday means of transport with a special focus on children and young people.
In terms of infrastructure, the city aims to build up a network of distinctive bicycle routes in order to achieve these objectives. At a final stage, the network will consist of main routes Hauptrouten for everyday use and comfort routes Komfortrouten , with the latter focussing on leisure cycling. Additional measures such as special Velostationen providing bike related services are expected to help to further improve the quality.
One of the key projects of the system is a tunnel beneath the tracks of the main railway station planned to combine a main connection with staffed possibilities where commuters can leave their bikes throughout the day. However, these efforts cause critique, mainly due to postponing.
The institution of the bike tunnel at the main railway station, originally planned for , is currently delayed to at least In response, the responsible city department points to the big investments made every year and mentions ongoing discussions that would finally lead to even better results.
There are , people living in Zürich as of 31 December ,  making it Switzerland's largest city. However, because of Zürich's national importance, and therefore its existing high fluctuation, one can hear all kinds of Swiss German dialects spoken by its inhabitants and commuters.
As of the December census, Dramatically increasing, according to the last census in , 8. Italian follows behind at 7. Other languages spoken here include Croatian and Serbian 4. Multiple choices were possible.
The Protestant Reformation led by Huldrych Zwingli made Zürich both a theological centre and a stronghold of Protestantism in Switzerland. Zürich attracted other influential Protestant Reformers like Heinrich Bullinger. Zwingli translated the Bible Zürich Bible into the local variety of German and introduced the Reformation by winning support of the magistrates, the princess abbess Katharina von Zimmern and the largely peasant population of the Canton of Zürich.
The canton unanimously adopted the Reformed tradition as represented by Zwingli. Religious wars between Catholics and Protestants tormented the Swiss Confederacy. Zwingli died for political and religious reasons by defending the Canton of Zürich in the Battle of Kappel. Bullinger took over his role as the city's spiritual leader. Since then both large Swiss churches, the Roman Catholic Church and Swiss Reformed Church, have been constantly losing members, though for the Catholic Church the decrease started 20 years later in around For the group of people, being between 24 and 44 years old, this is as high as one in every third person.
The Synagoge Zürich Löwenstrasse is the oldest and largest synagogue of Zürich. Nearly one tenth of the city's population are members of non-state-recognized Christian denominations for example the Eastern Orthodox Church. The level of unemployment in Zürich was 3. In , the average monthly income was about CHF before any deductions for social insurances and taxes.
Most of Zürich's sites are located within the area on either side of the Limmat, between the Main railway station and Lake Zürich. The churches and houses of the old town are clustered here, as are the most expensive shops along the famous Bahnhofstrasse.
The Lindenhof in the old town is the historical site of the Roman castle, and the later Carolingian Imperial Palace. Compared to other cities, there are few tall buildings in Zürich. The municipal building regulations Article 9  limit the construction of high-rise buildings to areas in the west and north of the city.
Around the year , regulations became more flexible and high-rise buildings were again planned and built. The people's initiative "40 metres feet is enough," which would have reduced both the maximum height and the high-rise buildings area, was clearly rejected on 29 November Zürich is a leading financial center and global city. By far the most important sector in the economy of Zürich is the service industry, which employs nearly four-fifths of workers. Other important industries include light industry, machine and textile industries and tourism.
Most Swiss banks have their headquarters in Zürich and there are numerous foreign banks in the Greater Zürich Area. Located in Zürich, the Swiss Stock Exchange was established in and is nowadays the fourth most prominent stock exchange in the world. In addition Zürich is the world's largest gold trading centre.
The high quality of life has been cited as a reason for economic growth in Zürich. The consulting firm Mercer has for many years ranked Zürich as a city with the highest quality of life in the world. Local planning authorities ensure clear separation between urban and recreational areas and there are many protected nature reserves.
Zürich is also ranked the sixth most expensive city in the world. In , Zürich was ranked ninth. The city ranked behind Hong Kong and ahead of Copenhagen. It is the third most expensive city in Europe and second most expensive city in Switzerland after Geneva.
Zürich benefits from the high level of investment in education that is typical of Switzerland in general and provides skilled labour at all levels. The city is home to two major universities, thus enabling access to graduates and high technology research.
Professional training incorporates a mix of practical work experience and academic study while, in general, emphasis is placed on obtaining a good level of general education and language ability.
As a result, the city is home to many multilingual people and employees generally demonstrate a high degree of motivation and a low level of absenteeism. Such characteristics are reflected in the high level of productivity the region enjoys and account for the opening of offices and research centres in the city by large corporations.
The exchange turnover generated at the SWX was in of 1,, In , fully electronic trading replaced the traditional floor trading system at the stock exchanges of Geneva founded in , Zürich and Basel About 60, people study at the 20 universities, colleges and institutions of higher education in Zürich. Two of Switzerland's most distinguished universities are located in the city: Both universities were listed in the top 50 world universities rated in ETH was founded in by the Swiss Confederation and opened its doors in as a polytechnic institute.
ETH achieved its reputation particularly in the fields of chemistry, mathematics and physics and there are 21 Nobel Laureates who are associated with the institution. ETH is usually ranked the top university in continental Europe. The University of Zürich was founded in , although its beginnings date back to when the Swiss reformer Ulrich Zwingli founded a college of theology.
Nowadays with its 24, students and 1, graduations each year, the University of Zürich is the largest in Switzerland and offers the widest range of subjects and courses at any Swiss higher education institution. See also List of largest universities by enrollment in Switzerland. Zürich is one of the most important media locations in the German-speaking part of the country. This status has been recently reinforced by the increase in availability of online publications published in Zürich.
The headquarters of Switzerland's national licence fee-funded German language television network " SF " are located in the Leutschenbach neighborhood, to the north of the Oerlikon railway station. There are three large daily newspapers published in Zürich that are known across Switzerland.
All three of those newspapers publish Sunday editions. Besides the three main daily newspapers, there are free daily commuter newspapers which are widely distributed: Smith, Assistant Secretary Mark E. David Altig, Kartik B.
Connors, Mary Daly, David E. David Reifschneider and John M. Meyer, Edward Nelson, and Joyce K. Andrea Ajello, Kurt F. Jeff Fuhrer and Daniel G. Clark, 3 Evan F. Koenig, Keith Sill, and Mark L. Carlos Garriga and Jonathan L. Louis and Kansas City, respectively. Annual Organizational Matters 4 In the agenda for this meeting, it was reported that advices of the election of the following members and alternate members of the Federal Open Market Committee for a term beginning January 30, , had been received and that these individuals had executed their oaths of office.
By unanimous vote, the Committee selected Janet L. Yellen to serve as Chairman through February 2, , and Jerome H. Powell to serve as Chairman, effective February 3, , until the selection of his successor at the first regularly scheduled meeting of the Committee in By unanimous vote, the following officers of the Committee were selected to serve until the selection of their successors at the first regularly scheduled meeting of the Committee in Logan to serve at the pleasure of the Committee as manager and deputy manager of the SOMA, respectively, on the understanding that these selections were subject to their being satisfactory to the Federal Reserve Bank of New York.
Advice subsequently was received that the manager and deputy manager selections indicated above were satisfactory to the Federal Reserve Bank of New York. By unanimous vote, the Authorization for Domestic Open Market Operations was approved with revisions to incorporate transactions of securities lending into the existing operational readiness testing provision and to improve the document's readability.
The Federal Open Market Committee the "Committee" authorizes and directs the Federal Reserve Bank selected by the Committee to execute open market transactions the "Selected Bank" , to the extent necessary to carry out the most recent domestic policy directive adopted by the Committee:.
To buy or sell in the open market securities that are direct obligations of, or fully guaranteed as to principal and interest by, the United States, and securities that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, that are eligible for purchase or sale under Section 14 b of the Federal Reserve Act "Eligible Securities" for the System Open Market Account "SOMA":.
As an outright operation with securities dealers and foreign and international accounts maintained at the Selected Bank: As a temporary operation: To exchange, at market prices, in connection with a Treasury auction, maturing Eligible Securities in the SOMA with the Treasury, in the case of Eligible Securities that are direct obligations of the United States or that are fully guaranteed as to principal and interest by the United States; and.
To exchange, at market prices, maturing Eligible Securities in the SOMA with an agency of the United States, in the case of Eligible Securities that are direct obligations of that agency or that are fully guaranteed as to principal and interest by that agency.
In order to ensure the effective conduct of open market operations, the Committee authorizes the Selected Bank to operate a program to lend Eligible Securities held in the SOMA to dealers on an overnight basis except that the Selected Bank may lend Eligible Securities for longer than an overnight term to accommodate weekend, holiday, and similar trading conventions. Subject to reasonable limitations on the total amount of a specific issue of Eligible Securities that may be auctioned; and.
Subject to reasonable limitations on the amount of Eligible Securities that each borrower may borrow. Reject bids that, as determined in its sole discretion, could facilitate a bidder's ability to control a single issue;.
Accept Treasury securities or cash as collateral for any loan of securities authorized in this paragraph 2; and. Accept agency securities as collateral only for a loan of agency securities authorized in this paragraph 2. The Committee authorizes the Selected Bank to undertake transactions of the type described in paragraphs 1 and 2 from time to time for the purpose of testing operational readiness, subject to the following limitations:.
All transactions authorized in this paragraph 3 shall be conducted with prior notice to the Committee;. The aggregate par value of the transactions authorized in this paragraph 3 that are of the type described in paragraph 1. The outstanding amount of the transactions described in paragraphs 1. In order to ensure the effective conduct of open market operations, while assisting in the provision of short-term investments or other authorized services for foreign central bank and international accounts maintained at a Federal Reserve Bank the "Foreign Accounts" and accounts maintained at a Federal Reserve Bank as fiscal agent of the United States pursuant to section 15 of the Federal Reserve Act together with the Foreign Accounts, the "Customer Accounts" , the Committee authorizes the following when undertaken on terms comparable to those available in the open market:.
Any Federal Reserve Bank that maintains Customer Accounts, for any such Customer Account, when appropriate and subject to all other necessary authorization and approvals, to:. Undertake repo transactions in Eligible Securities with dealers with a corresponding reverse repo transaction in such Eligible Securities with the Customer Accounts; and.
Transactions undertaken with Customer Accounts under the provisions of this paragraph 4 may provide for a service fee when appropriate. Transactions undertaken with Customer Accounts are also subject to the authorization or approval of other entities, including the Board of Governors of the Federal Reserve System and, when involving accounts maintained at a Federal Reserve Bank as fiscal agent of the United States, the United States Department of the Treasury.
The Committee authorizes the Chairman of the Committee, in fostering the Committee's objectives during any period between meetings of the Committee, to instruct the Selected Bank to act on behalf of the Committee to:. Adjust somewhat in exceptional circumstances the stance of monetary policy and to take actions that may result in material changes in the composition and size of the assets in the SOMA; or.
Undertake transactions with respect to Eligible Securities in order to appropriately address temporary disruptions of an operational or highly unusual nature in U. Any such adjustment described in subparagraph A of this paragraph 5 shall be made in the context of the Committee's discussion and decision about the stance of policy at its most recent meeting and the Committee's long-run objectives to foster maximum employment and price stability, and shall be based on economic, financial, and monetary developments since the most recent meeting of the Committee.
The Chairman, whenever feasible, will consult with the Committee before making any instruction under this paragraph 5. The Committee voted unanimously to reaffirm without revision the Authorization for Foreign Currency Operations and the Foreign Currency Directive as shown below. The Federal Open Market Committee the "Committee" authorizes the Federal Reserve Bank selected by the Committee the "Selected Bank" to execute open market transactions for the System Open Market Account as provided in this Authorization, to the extent necessary to carry out any foreign currency directive of the Committee:.
To purchase and sell foreign currencies also known as cable transfers at home and abroad in the open market, including with the United States Treasury, with foreign monetary authorities, with the Bank for International Settlements, and with other entities in the open market.
This authorization to purchase and sell foreign currencies encompasses purchases and sales through standalone spot or forward transactions and through foreign exchange swap transactions.
For purposes of this Authorization, foreign exchange swap transactions are: To hold balances of, and to have outstanding forward contracts to receive or to deliver, foreign currencies. All transactions in foreign currencies undertaken pursuant to paragraph 1 above shall, unless otherwise authorized by the Committee, be conducted:. In close and continuous cooperation and consultation, as appropriate, with the United States Treasury.
In consultation, as appropriate, with foreign monetary authorities, foreign central banks, and international monetary institutions. For any operation that involves standalone spot or forward transactions in foreign currencies:.
The Committee must direct the Selected Bank in advance to execute the operation if it would result in the overall volume of standalone spot and forward transactions in foreign currencies, as defined in paragraph 3. The Foreign Currency Subcommittee the "Subcommittee" must direct the Selected Bank in advance to execute the operation if the Subcommittee believes that consultation with the Committee is not feasible in the time available.
The Committee authorizes the Subcommittee to direct the Selected Bank in advance to execute the operation if it would result in the overall volume of standalone spot and forward transactions in foreign currencies, as defined in paragraph 3. For purposes of this Authorization, the overall volume of standalone spot and forward transactions in foreign currencies is defined as the sum disregarding signs of the dollar values of individual foreign currencies purchased and sold, valued at the time of the transaction.
The Committee authorizes the Selected Bank, with the prior approval of the Subcommittee and at the request of the United States Treasury, to conduct swap transactions with the United States Exchange Stabilization Fund established by section 10 of the Gold Reserve Act of under agreements in which the Selected Bank purchases foreign currencies from the Exchange Stabilization Fund and the Exchange Stabilization Fund repurchases the foreign currencies from the Selected Bank at a later date such purchases and sales also known as warehousing.
The Committee authorizes the Selected Bank to maintain reciprocal currency arrangements established under the North American Framework Agreement, standing dollar liquidity swap arrangements, and standing foreign currency liquidity swap arrangements as provided in this Authorization and to the extent necessary to carry out any foreign currency directive of the Committee. For reciprocal currency arrangements all drawings must be approved in advance by the Committee or by the Subcommittee, if the Subcommittee believes that consultation with the Committee is not feasible in the time available.
For standing dollar liquidity swap arrangements all drawings must be approved in advance by the Chairman. The Chairman may approve a schedule of potential drawings, and may delegate to the manager, System Open Market Account, the authority to approve individual drawings that occur according to the schedule approved by the Chairman.
For standing foreign currency liquidity swap arrangements all drawings must be approved in advance by the Committee or by the Subcommittee, if the Subcommittee believes that consultation with the Committee is not feasible in the time available. Operations involving standing dollar liquidity swap arrangements and standing foreign currency liquidity swap arrangements shall generally be directed at countering strains in financial markets in the United States or abroad, or reducing the risk that they could emerge, so as to mitigate their effects on economic and financial conditions in the United States.
For reciprocal currency arrangements, standing dollar liquidity swap arrangements, and standing foreign currency liquidity swap arrangements:. Any changes in the terms of existing arrangements must be approved in advance by the Chairman. The Chairman shall keep the Committee informed of any changes in terms, and the terms shall be consistent with principles discussed with and guidance provided by the Committee.
Any other operations in foreign currencies for which governance is not otherwise specified in this Authorization such as foreign exchange swap transactions with private-sector counterparties must be authorized and directed in advance by the Committee.
The Committee authorizes the Selected Bank to hold foreign currencies for the System Open Market Account in accounts maintained at foreign central banks, the Bank for International Settlements, and such other foreign institutions as approved by the Board of Governors under Section Primarily, to ensure sufficient liquidity to enable the Selected Bank to conduct foreign currency operations as directed by the Committee;. Subject to paragraphs 7. Purchasing and selling obligations of, or fully guaranteed as to principal and interest by, a foreign government or agency thereof "Permitted Foreign Securities" through outright purchases and sales;.
Purchasing Permitted Foreign Securities under agreements for repurchase of such Permitted Foreign Securities and selling such securities under agreements for the resale of such securities; and.
Managing balances in various time and other deposit accounts at foreign institutions approved by the Board of Governors under Regulation N. The Subcommittee, in consultation with the Committee, may provide additional instructions to the Selected Bank regarding holdings of foreign currencies. With the prior approval of the Committee, to enter into any needed agreement or understanding with the Secretary of the United States Treasury about the division of responsibility for foreign currency operations between the System and the United States Treasury;.
To advise the Secretary of the United States Treasury concerning System foreign currency operations, and to consult with the Secretary on policy matters relating to foreign currency operations;.
From time to time, to transmit appropriate reports and information to the National Advisory Council on International Monetary and Financial Policies. The Committee authorizes the Selected Bank to undertake transactions of the type described in this Authorization, and foreign exchange and investment transactions that it may be otherwise authorized to undertake, from time to time for the purpose of testing operational readiness.
These transactions shall be conducted with prior notice to the Committee. Any authority of the Subcommittee pursuant to this Authorization may be exercised by the Chairman if the Chairman believes that consultation with the Subcommittee is not feasible in the time available.
The Chairman shall promptly report to the Subcommittee any action approved by the Chairman pursuant to this paragraph. The Committee authorizes the Chairman, in exceptional circumstances where it would not be feasible to convene the Committee, to foster the Committee's objectives by instructing the Selected Bank to engage in foreign currency operations not otherwise authorized pursuant to this Authorization.
Any such action shall be made in the context of the Committee's discussion and decisions regarding foreign currency operations. The Chairman, whenever feasible, will consult with the Committee before making any instruction under this paragraph.
The Committee directs the Federal Reserve Bank selected by the Committee the "Selected Bank" to execute open market transactions, for the System Open Market Account, in accordance with the provisions of the Authorization for Foreign Currency Operations the "Authorization" and subject to the limits in this Directive. Standing foreign currency liquidity swap arrangements with the following foreign central banks:. The Committee directs the Selected Bank to hold and to invest foreign currencies in the portfolio in accordance with the provisions of paragraph 7 of the Authorization.
The Committee directs the Selected Bank to report to the Committee, at each regular meeting of the Committee, on transactions undertaken pursuant to paragraphs 1 and 6 of the Authorization.
The Selected Bank is also directed to provide quarterly reports to the Committee regarding the management of the foreign currency holdings pursuant to paragraph 7 of the Authorization. The Committee directs the Selected Bank to conduct testing of transactions for the purpose of operational readiness in accordance with the provisions of paragraph 9 of the Authorization.
By unanimous vote, the Committee revised its Program for Security of FOMC Information with a set of technical changes to update references to other documents. In the Committee's annual reconsideration of the Statement on Longer-Run Goals and Monetary Policy Strategy, participants agreed that only a minor revision was required at this meeting, which was to update the reference to the median of FOMC participants' estimates of the longer-run normal rate of unemployment from 4.
All participants supported the statement with the revision, and the Committee voted unanimously to approve the updated statement. The Federal Open Market Committee FOMC is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.
The Committee seeks to explain its monetary policy decisions to the public as clearly as possible. Such clarity facilitates well-informed decisionmaking by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society.
Inflation, employment, and long-term interest rates fluctuate over time in response to economic and financial disturbances. Moreover, monetary policy actions tend to influence economic activity and prices with a lag.
Therefore, the Committee's policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee's goals. The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for inflation.
The Committee reaffirms its judgment that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. The Committee would be concerned if inflation were running persistently above or below this objective.
Communicating this symmetric inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates and enhancing the Committee's ability to promote maximum employment in the face of significant economic disturbances. The maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market.
These factors may change over time and may not be directly measurable. Consequently, it would not be appropriate to specify a fixed goal for employment; rather, the Committee's policy decisions must be informed by assessments of the maximum level of employment, recognizing that such assessments are necessarily uncertain and subject to revision.
The Committee considers a wide range of indicators in making these assessments. Information about Committee participants' estimates of the longer-run normal rates of output growth and unemployment is published four times per year in the FOMC's Summary of Economic Projections. For example, in the most recent projections, the median of FOMC participants' estimates of the longer-run normal rate of unemployment was 4.
In setting monetary policy, the Committee seeks to mitigate deviations of inflation from its longer-run goal and deviations of employment from the Committee's assessments of its maximum level. These objectives are generally complementary. However, under circumstances in which the Committee judges that the objectives are not complementary, it follows a balanced approach in promoting them, taking into account the magnitude of the deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with its mandate.
The Committee intends to reaffirm these principles and to make adjustments as appropriate at its annual organizational meeting each January. Financial conditions eased further over recent weeks with market participants pointing to increasing appetites for risk and perceptions of diminished downside risks as factors buoying market sentiment. In this environment, yields on safe assets such as U.
Treasury securities moved up some while corporate risk spreads narrowed and equity prices recorded further significant gains. Survey measures of longer-term inflation expectations showed little change. Judging from interest rate futures, the expected path of the federal funds rate shifted up over the period but continued to imply a gradual expected pace of policy firming.
The deputy manager followed with a discussion of recent developments in money markets and FOMC operations. Year-end pressures were evident in the market for foreign exchange basis swaps, but conditions returned to normal early in Yields on Treasury bills maturing in early March were elevated, reflecting investors' concerns about the possibility that a failure to raise the federal debt ceiling could affect the timing of principal payments for these securities.
The Open Market Desk continued to execute reinvestment operations for Treasury and agency securities in the SOMA in accordance with the procedure specified in the Committee's directive to the Desk. The deputy manager also reported on the volume of overnight reverse repurchase agreement operations over the intermeeting period and discussed the Desk's plans for small-value operational tests of various types of open market operations over the coming year. By unanimous vote, the Committee ratified the Open Market Desk's domestic transactions over the intermeeting period.
There were no intervention operations in foreign currencies for the System's account during the intermeeting period. Inflation Analysis and Forecasting The staff presented three briefings on inflation analysis and forecasting.
The presentations reviewed a number of commonly used structural and reduced-form models. These included structural models in which the rate of inflation is linked importantly to measures of resource slack and a measure of expected inflation relevant for wage and price setting--so-called Phillips curve specifications--as well as statistical models in which inflation is primarily determined by a time-varying inflation trend or longer-run inflation expectations.
The briefings noted several factors beyond those captured in the models that appeared to have put downward pressure on prices in recent years. These included structural changes in price setting for some items, such as medical care, and the effects of idiosyncratic price shocks, such as the unusual drop in prices of wireless telephone services in The staff found little compelling evidence for the possible influence of other factors such as a more competitive pricing environment or a change in the markup of prices over unit labor costs.
Overall, for the set of models presented, the prediction errors in recent years were larger than those observed during the period but were consistent with historical norms and, in most models, did not appear to be biased. The staff presentations considered two key channels by which monetary policy influences inflation--the response of inflation to changes in resource utilization and the role of inflation expectations, or trend inflation, in the price-setting process.
In part because inflation was importantly influenced by a number of short-lived factors, the effects of current and expected resource utilization gaps on inflation were not easy to discern empirically. Estimates of the strength of those effects had diminished noticeably in recent years. The briefings highlighted a number of other challenges associated with estimating the strength and timing of the linkage between resource utilization and inflation, including the reliability of and changes over time in estimates of the natural rate of unemployment and potential output and the ability to adequately account for supply shocks.
In addition, some research suggested that the relationship between resource utilization and inflation may be nonlinear, with the response of inflation increasing as rates of utilization rise to very high levels. With regard to inflation expectations, two of the briefings presented findings that the longer-run trend in inflation, absent cyclical disturbances or transitory fluctuations, had been stable in recent years at a little below 2 percent. The briefings reported that the average forecasting performance of models employing either statistical estimates of inflation trends or survey-based measures of inflation expectations as proxies for inflation expectations appeared comparable, even though different versions of such models could yield very different forecasts at any given point in time.
Following the staff presentations, participants discussed how the inflation frameworks reviewed in the briefings informed their views on inflation and monetary policy. Almost all participants who commented agreed that a Phillips curve-type of inflation framework remained useful as one of their tools for understanding inflation dynamics and informing their decisions on monetary policy.
Policymakers pointed to a number of possible reasons for the difficulty in estimating the link between resource utilization and inflation in recent years. These reasons included an extended period of low and stable inflation in the United States and other advanced economies during which the effects of resource utilization on inflation became harder to identify, the shortcomings of commonly used measures of resource gaps, the effects of transitory changes in relative prices, and structural factors that had made business pricing more competitive or prices more flexible over time.
It was noted that research focusing on inflation across U. A couple of participants questioned the usefulness of a Phillips curve-type framework for policymaking, citing the limited ability of such frameworks to capture the relationship between economic activity and inflation.
Participants generally agreed that inflation expectations played a fundamental role in understanding and forecasting inflation, with stable inflation expectations providing an important anchor for the rate of inflation over the longer run. Participants acknowledged that the causes of movements in short- and longer-run inflation expectations, including the role of monetary policy, were imperfectly understood. They commented that various proxies for inflation expectations--readings from household and business surveys or from economic forecasters, estimates derived from market prices, or estimated trends--were imperfect measures of actual inflation expectations, which are unobservable.
That said, participants emphasized the critical need for the FOMC to maintain a credible longer-run inflation objective and to clearly communicate the Committee's commitment to achieving that objective. Several participants indicated that they viewed the available evidence as suggesting that longer-run inflation expectations remained well anchored; one cited recent research finding that inflation expectations had become better anchored following the Committee's adoption of a numerical inflation target.
However, a few saw low levels of inflation over recent years as reflecting, in part, slippage in longer-run inflation expectations below the Committee's 2 percent objective. In that regard, a number of participants noted the importance of continuing to emphasize that the Committee's 2 percent inflation objective is symmetric. A couple of participants suggested that the Committee might consider expressing its objective as a range rather than a point estimate.
A few other participants suggested that the FOMC could begin to examine whether adopting a monetary policy framework in which the Committee would strive to make up for past deviations of inflation from target might address the challenge of achieving and maintaining inflation expectations consistent with the Committee's inflation objective, particularly in an environment in which the neutral rate of interest appeared likely to remain low.
Growth of real final domestic purchases by households and businesses, generally a good indicator of the economy's underlying momentum, was solid. Consumer price inflation, as measured by the month percentage change in the price index for personal consumption expenditures PCE , remained below 2 percent in December.
Survey-based measures of longer-run inflation expectations were little changed on balance. Total nonfarm payroll employment increased solidly in December, and the national unemployment rate remained at 4. The unemployment rates for Hispanics, for Asians, and for African Americans were lower than earlier in the year and close to the levels seen just before the most recent recession.
The national labor force participation rate held steady in December; relative to the declining trend suggested by an aging population, this sideways movement in the participation rate represented a further strengthening in labor market conditions. The participation rate for prime-age defined as ages 25 to 54 men edged up in December, while the rate for prime-age women declined slightly. The share of workers who were employed part time for economic reasons was little changed in December and was close to its pre-recession level.
The rates of private-sector job openings and quits were little changed in November, and the four-week moving average of initial claims for unemployment insurance benefits continued to be at a low level in mid-January. Recent readings showed that gains in hourly labor compensation remained modest.
Total industrial production increased over the two months ending in December, with broad-based gains in manufacturing, mining, and utilities output. Automakers' schedules indicated that assemblies of light motor vehicles would likely move up over the coming months. Broader indicators of manufacturing production, such as the new orders indexes from national and regional manufacturing surveys, pointed to further solid increases in factory output in the near term.
Real PCE increased strongly in the fourth quarter. Recent readings on key factors that influence consumer spending--including gains in employment, real disposable personal income, and households' net worth--continued to be supportive of further solid growth of real PCE in the near term.
Consumer sentiment in early January, as measured by the University of Michigan Surveys of Consumers, remained upbeat. Real residential investment rose briskly in the fourth quarter after having declined in the previous two quarters. Both starts and issuance of building permits for new single-family homes increased in the fourth quarter as a whole, and starts for multifamily units also moved up.
Moreover, sales of both new and existing homes rose in the fourth quarter. Real private expenditures for business equipment and intellectual property increased at a solid pace in the fourth quarter. Recent indicators of business equipment spending--such as rising new orders of nondefense capital goods excluding aircraft and upbeat readings on business sentiment from national and regional surveys--pointed to further gains in equipment spending in the near term.
Firms' real spending for nonresidential structures rose modestly in the fourth quarter, as an increase in outlays for drilling and mining structures was largely offset by a decline in expenditures for other business structures. The number of crude oil and natural gas rigs in operation--an indicator of spending for structures in the drilling and mining sector--continued to edge up through late January. Total real government purchases rose modestly in the fourth quarter. Increased federal government purchases mostly reflected a rise in defense spending, and the gains in purchases by state and local governments were led by an increase in construction spending in this sector.
Exports of goods and services picked up in November, while imports, particularly of consumer goods, increased robustly. Available data for goods trade in December suggested that import growth again outpaced export growth.
All told, real net exports were estimated to be a substantial drag on real GDP growth in the fourth quarter. Recent readings on survey-based measures of longer-run inflation expectations--including those from the Michigan survey and the Desk's Survey of Primary Dealers and Survey of Market Participants--were little changed on balance. Incoming data suggested that economic activity abroad continued to expand at a solid pace and that this expansion was broad based across countries.
In the emerging market economies EMEs , Mexico's economy rebounded after being held back by natural disasters in the third quarter. Economic growth remained solid in China but cooled off a bit in some emerging Asian economies after a very strong third-quarter performance. Inflation in both AFEs and EMEs picked up significantly in the fourth quarter, largely reflecting a boost from rising oil prices. Inflation excluding food and energy prices remained well below central bank targets in several economies, including the euro area and Japan.
Staff Review of the Financial Situation Domestic financial market conditions eased considerably further over the intermeeting period. A strengthening outlook for economic growth in the United States and abroad, along with recently enacted tax legislation, appeared to boost investor sentiment.
In addition, the dollar depreciated broadly amid strong foreign economic data and monetary policy communications by some foreign central banks that investors reportedly viewed as less accommodative than expected. FOMC communications over the intermeeting period were generally characterized by market participants as consistent with their expectations for continued gradual removal of monetary policy accommodation.
The Committee's decision to raise the target range for the federal funds rate at the December meeting was widely expected, and the probability of an increase in the target range for the federal funds rate occurring at the January meeting, as implied by quotes on federal funds futures contracts, remained essentially zero.
Over the intermeeting period, the futures-implied probability of policy firming at the March meeting rose to about 85 percent; respondents to the Desk's Survey of Primary Dealers and Survey of Market Participants assigned, on average, similarly high odds to a rate increase at the March meeting. Levels of the federal funds rate at the end of and implied by overnight index swap rates moved up moderately. The nominal Treasury yield curve shifted up over the intermeeting period amid an improved outlook for domestic and foreign economic growth.
Yields on both 2- and year Treasury securities moved up about 30 basis points. Measures of inflation compensation based on TIPS fell in response to the soft reading on core inflation in the November CPI release but subsequently moved up against the backdrop of an improving global growth outlook, higher commodity prices, depreciation of the dollar, and the stronger-than-expected reading on core inflation in the December CPI release.
On net, inflation compensation moved up at both the 5-year and the 5-toyear horizons, and both measures returned to levels seen in early before the string of generally weaker-than-expected inflation readings. Broad equity price indexes rose substantially over the intermeeting period, with investors pointing to a stronger global economic outlook and the supportive effect of the recently enacted tax legislation on risk sentiment.
Spreads of both investment- and speculative-grade corporate bond yields over comparable-maturity Treasury yields declined slightly and remained well below their historical averages. The FOMC's decision at its December meeting to raise the target range for the federal funds rate was transmitted smoothly to money market rates. The effective federal funds rate held steady at a level near the middle of the target range except at year-end.
While borrowing costs moved up briefly in offshore dollar funding markets over year-end, conditions in money markets were reported to be orderly. In line with recent year-end experiences, rates and volumes in the federal funds and Eurodollar markets declined, while in secured markets, rates on Treasury repurchase agreements increased.
After year-end, pressures in money markets abated quickly and rates and volumes returned to recent ranges. The broad nominal dollar index declined nearly 4 percent relative to its value at the time of the December FOMC meeting; the decline was most pronounced against AFE currencies, but the dollar depreciated notably against most EME currencies as well.
EME equity prices registered substantial gains, in part supported by a significant rise in commodity prices; emerging market bond spreads narrowed moderately, and flows into EME equity and bond funds strengthened substantially.
Market-based measures of policy expectations and longer-term sovereign yields moved up in most AFEs.
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