or are available for work. labour force participation has increased over time in new zealand as female participation in the workforce has increased, and, more recently, as older age cohorts remain in the labour force for longer. increasing participation increases the supply of labour and increases potential output. assumed trends amongst labour market cohorts, combined with demographic projections, suggest that a structural upward trend in the participation rate will continue in new zealand through the remainder of this decade. labour force participation is also influenced by the state of the economy. upswings in activity encourage more people to actively seek work, increasing the participation rate. conversely, during recessions participation tends to weaken, as people leave the labour force, discouraged by lack of employment opportunities. bis central bankers ’ speeches figure 5 : labour force participation rate and estimated trend ( % of working age population ) source : statistics new zealand, rbnz estimates. similarly, growth in capital inputs can be influenced by structural factors in the economy such as population growth or changing technology, but can also move somewhat cyclically with business sentiment, access to finance, and investment intentions. in an ideal world, we would take full account of these short to medium term influences on potential, but it is difficult to measure and interpret these movements in real time. the reserve bank ’ s use of trends in estimating potential output means these estimates capture the large permanent or persistent changes in input components, such as lasting shifts in participation, but does not capture higher - frequency movements. “ fundamental ” factors ultimately affect “ long term ” prospects there are a range of more fundamental determinants of growth that matter hugely for economic outcomes over the very long term, but their effect over shorter time horizons is difficult to detect. typically these factors are more important for explaining differences in growth across countries rather than over time. for these reasons they are less relevant considerations for monetary policy and central banks tend to talk about them much less. to acknowledge their role in the overall growth story, let me briefly offer a couple of examples of these determinants : geography and institutions. economic geography can have a significant effect on long term prospects. 2 proximity and connectedness to regional or global markets exposes domestic businesses to greater competition, aids in the transfer of technology and knowledge, and generates greater efficiencies of scale and scope. new zealand ’ s small population and distance from major markets can make it difficult to capture these benefits. our geographical location may be fixed, but the challenge posed by our isolation can change

subsequent rise in international food and energy prices would still have led to headline consumer price index inflation exceeding 6 % now. in an absolute sense, actual and expected inflation is too high and needs to be reduced. subsequent monetary policy committee decisions have seen the ocr rise from 0. 25 % in august 2021 to the current rate of 4. 25 %. our actions display the monetary policy committee's determination and confidence in returning annual inflation to within our 1 % to 3 % target range. our focus on low and stable inflation is the best contribution we can make to the overall wellbeing of new zealanders. in a relative sense, new zealand is in a strong macroeconomic position relative to most oecd nations. we are around the lowest quartile for both inflation and unemployment relative to other oecd nations. we have a stable and well - functioning financial system that is resilient to a wide range of interest rate and employment shocks. and, as outlined in our most recent monetary policy statement, we have resilient household, public, and business sector balance sheets in aggregate. new zealand has a near record low unemployment rate of 3. 3 % and exceptionally high labour force participation rates. households have accumulated financial savings, with average household incomes rising in line with inflation. nominal wage rates have risen, with incomes further bolstered as people moved jobs to earn more, worked longer hours, or gained promotions. average hourly earnings growth for the private sector was 8. 6 % 1 in the year to september 2022, compared with consumer price index inflation of 7. 2 % in the same period. as interest rates rise, we expect spending to slow and unemployment levels to increase as more people join the workforce over the coming year. even with the expected slowdown in the period ahead, it is anticipated that the level of employment will remain high. large scale asset programme 2 / 7 bis - central bankers'speeches i'd like to briefly comment on the large scale asset purchase and funding for lending programmes which featured during the 2021 / 22 financial year. the review and assessment of monetary policy over the past five years showed that the large scale asset programme was highly effective in response to the liquidity crisis that emerged in early 2020 and in lowering longer - term interest rates. the funding for lending programme also gave banks confidence that a stable and secure funding source was available during a period of heightened financial market uncertainty. banks were able to continue their business of financial intermediation, avoiding a credit