, with the remaining 0. 5 percentage points due to weaker non - tradables inflation. tradables inflation has been low for several reasons. the global oversupply of commodities and manufactured goods, and the high level of excess capacity in the advanced economies, have kept cost and price pressures among our trading partners contained. 3 the steady appreciation in new zealand ’ s real effective exchange rate since 2011 ( until recently ) has been a major factor behind periods of negative tradables inflation over the past three years. and, more recently, the 52 percent decline in oil prices since june 2014 ( figure 2 ) resulted in negative quarterly inflation in the december 2014 and march 2015 quarters. figure 2 : oil and the domestic petrol price source : reuters, ministry of business, innovation, and employment non - tradables inflation has been relatively low and stable, averaging around 2. 5 percent since the beginning of 2012. low non - tradables inflation largely reflects the impact of strong factor accumulation that has expanded capacity, and enabled strong demand growth to be met without increased inflation pressures. this is particularly the case in the labour market, where record levels of net immigration and historically high labour force participation, along with natural increase, have expanded the labour supply by around 3 percent over the past year ( figure 3 ), and enabled a strong rate of employment growth to be absorbed without any acceleration in wage inflation. the continuous commodity index is currently about 40 percent below its 2011 peak, and represents the second largest commodity bear market in 50 years ( only in the immediate aftermath of the global financial crisis was there a larger decline ). bis central bankers ’ speeches figure 3 : annual labour force growth source : statistics new zealand non - tradables inflation has been about ½ of a percentage point weaker on an annual basis than the bank ’ s modelling estimates would suggest is normal for this phase of the economic cycle, even allowing for the stronger growth in economic capacity. 4 this underestimate of inflation has also occurred in other countries and could be due to several factors. for example, inflation expectations may be weaker than survey data suggests, the tradables component of non - tradable products and services may be higher than previously thought, or online commerce may be increasing competition and squeezing margins in non - traded sectors, such as retail. under the bank ’ s flexible inflation targeting framework, the policy targets agreement ( pta ) specifically recognises that annual cpi inflation will fluctuate around the medium - term trend due to factors

its markets and institutions — including banks, savings and loans, and other financial product and service providers — are resilient and able to function even following a bad shock. ” bank of england ( in line with the uk prudential regulation authority ) [UNK] “ financial stability can be defined as a condition in which the financial system — which comprises financial intermediaries, markets, and market infrastructures — is capable of withstanding shocks and the unravelling of financial imbalances. ” federal reserve [UNK] “ financial stability can be defined as ‘ a condition in which the financial system is not unstable ’. it can also mean a condition in which the three components of the financial system — financial institutions, financial markets, and financial infrastructure — are stable. ” “ a stable financial system fulfils its central macroeconomic functions smoothly and at all times. this embraces, in particular, the efficient allocation of financial resources and risks as well as the provision of an efficient and secure financial infrastructure. ” monetary authority of singapore resilience as a pathway to prosperity unclassified unclassified [UNK] world bank [UNK] “ mas seeks [ financial stability ] to reduce the risk and impact of a failure. … promoting a stable system … requires mas to meet the other five objectives [ safe and sound financial intermediaries ; safe and efficient financial infrastructure ; fair, efficient and transparent organised markets ; transparent and fair - dealing intermediaries and offerors ; and wellinformed and empowered consumers. ] ” “ a stable financial system is capable of efficiently allocating resources, assessing, and managing financial risks, maintaining employment levels close to the economy ’ s natural rate, and eliminating relative price movements of real or financial assets that will affect monetary stability or employment levels. ” the imf ( working paper no. 2004 / 187 ) [UNK] “ a financial system is in a range of stability whenever it is capable of facilitating ( rather than impeding ) the performance of an economy, and of dissipating financial imbalances that arise endogenously or as a result of significant adverse and unanticipated events. ” appendix c - financial policy remit from the minister of finance 2022 financial policy remit purpose this financial policy remit is issued by the minister of finance under section 203 of the reserve bank of new zealand act 2021 ( the act ). the financial policy remit provides for matters that are desirable for the reserve bank to have regard to in relation to one or more of the following, in accordance