not determine the economic context we operate in. instead, we react to the economic context with a clear purpose – aiming for price stability – thus building on a reputation for delivering low and stable inflation expectations. we are tacking into the inflation headwinds right now by raising interest rates at times of severe capacity constraints in the economy and high inflation. we continued to do that last week, raising the official cash rate from 4. 25 % to 4. 75 %. the monetary policy committee agreed that the ocr still needs to increase, as indicated in the november statement, to ensure inflation returns to within its target range over the medium term. while there are early signs of price pressures easing, core consumer price inflation remains too high, employment is still beyond its maximum sustainable level, and near - term inflation expectations remain elevated. low and stable inflation is a necessary outcome for economic wellbeing in the longer term. inflation is no one ’ s friend. inflation makes people poorer. the second strand of our work is promoting financial stability. we aim to lower the probability and impact of deposit taking institutions and insurers getting into financial trouble, so that they can continue to provide the critical services the public rely on. the third main strand of our work is delivering our other central banking functions – ensuring the supply of cash throughout the economy, transaction banking the banks, and using, overseeing and operating critical payment and settlement systems. in delivering on these three strands of work there is a lot of balancing and trade - offs we must undertake. we use a wide range of knowledge and insights, conventional economic tools and frameworks, and financial capital and resources to succeed. in doing so, we aim to be transparent and understood by the broad public – our customers. looking ahead, in striving to be exceptional in our work, we are working to act holistically across all aspects of the reserve bank ’ s work strands to draw data, gain insights, and most importantly manage trade - offs. most of the goals of our work are mutually supportive, but we will meet tradeoffs from time - to - time. if we wanted to write the algorithm to replace central bankers, we are trying to maximise several objective functions, subject to taking on no undue operational, legal, financial, and reputation risk. we thus need to have clarity on our objective functions ( purposes ) ; secondary criteria outlined in our remits ; and what is reasonable and undue risk. in practical terms, some examples include :

cell phone connectivity was dead, and cash was again king in enabling a means of exchange. society cohesion is stressed quickly and severely if there is suddenly no agreed means of exchange. we also want to have a payments system that encourages and enables innovation. this may be a central bank digital currency to foster innovation, reduce costs in banking, enable faster and more secure payments, and encourage greater competition in the banking sector. 12 however, doing that may have implications for the resilience of the system. the more competing players there are with access to the banking system, the more reliance there is on third party services and hence new and different risks to manage. the balancing act so what are the criteria to manage all these trade - offs and what is our appetite for risk? we are thinking about these questions and the goal is to always be able to calibrate, collate, and explain our overall framework for decision - making. our new, empowered, board own our ‘ risk appetite statement ’ and understand its economic underpinnings i. e, when we are standing on facts versus beliefs. beliefs need continuous testing, evidence, research and insight. in simple terms, our board looks to ensure we have : clarity of our objectives ; an understanding of the hierarchy involved across our legislation, remits, and other expectations ; an articulated risk appetite to achieve our outcomes and manage any trade - offs ; awareness of the facts our decisions stand on ; and trust in the underpinnings of the beliefs we hold that drive our economic, financial, and operational activities. _ _ _ _ _ _ _ _ _ _ _ _ the future of money – private innovation : issue paper dec, 2022 https : / / www. rbnz. govt. nz / - / media / project / sites / rbnz / files / consultations / future - of - money / fom - privateinnovation. pdf it is only then that the board can have full confidence that the activities the reserve bank undertakes, and the capability and capacity we need to succeed, are appropriate. these activities and capability will change through time – most often driven by factors outside of the bank ’ s control such as technology, demographics, and changing societal preferences. of course, bringing it all together are our values and culture the board set and expect of our people. this comes to the heart of why we have been introducing a te ao maori view of our work into the reserve bank ’ s behaviours – it is