orr ( 2020, 10 march ). speech : navigating at low altitude : monetary policy with very low interest rates. retrieved from : https : / / www. rbnz. govt. nz / research - andpublications / speeches / 2020 / speech2020 - 03 - 10 sarah drought, roger perry and adam richardson ( 2018 ). aspects of implementing unconventional monetary policy in new zealand. retrieved from : https : / / www. rbnz. govt. nz / research - and - publications / reserve - bank - bulletin / 2018 / rbb2018 - 81 - 04 we responded to the covid - 19 shock by lowering the ocr by 75 basis points5 to its lowest practical level ( at the time ) and implemented additional monetary policy tools – including the large scale asset purchase programme ( lsap ) 6 and the funding for lending programme ( flp ) 7. our monetary stimulus was, over time, accompanied by significant government spending and investment ( fiscal stimulus ) to support people and businesses, equivalent to around 20 percent of gdp. 8 the government ’ s fiscal response was one of the highest levels of direct fiscal support across advanced economies outside of the united states ( see figure 1 ) 9. the combined health and economic policy response of new zealand has, to date, been ranked as one of the most effective across a wide range of countries. for example, a hybrid index of economic and health measures ( see figure 2 ) by economist david skilling places new zealand near the top - end of success in responding to the pandemic, with the caveat being the pandemic is not over yet. 10 figure 2 – landfall strategy covid - 19 performance index index note : the index is an equally weighted index of ( 1 ) the average level of covid restrictions stringency ( over the full covid period ) taken from the blavatnik school at oxford ; ( 2 ) the cumulative excess deaths per capita over the covid period ( a calculation from the economist ) ; and ( 3 ) cumulative gdp performance since q1 2020 ( compared to full year gdp in 2019 ). source : landfall strategy. _ _ _ _ _ _ _ _ _ _ _ _ reserve bank of new zealand ( 2020, 16 march ). media release : ocr reduced to 0. 25 percent for next 12 months. retrieved from : https : / / www. rbnz. govt. nz / news / 2020 / 03 / ocrreduced - to

measured against a basket of our closest trading partners ( twi ) – is now around 7 percent lower than its pandemic peak. the most notable driver of recent inflation pressures, from a tradables perspective, is rising oil prices. new zealand petrol prices increased 30 percent in 2021. higher oil prices have resulted from robust global demand, restrained oil supply during the early stages of the pandemic as global economic uncertainty increased, and more recently geopolitical tensions in eastern europe. higher fuel prices are pervasive within the economy, as they are a significant input cost for many firms. price pressures arising from tradables inflation is also becoming more broad - based. globally, the recent significant government and monetary stimulus helped avoid the prolonged negative impacts on demand from the covid - 19 pandemic. now, this demand is struggling to be met with sufficient global supply due to continued covid - 19 outbreaks and various health related restrictions and disruptions. the degree of inflationary pressure experienced across economies has, to some extent, depended on the different starting points and experiences heading into the pandemic. most of our advanced economy trading partners have experienced a long period of very subdued ( often below target ) consumer price inflation and persistently high unemployment ( see figure 4 and table 1 ). until recently, the central banks of japan, the united states, euro - area, australia and ( less so ) new zealand were all increasingly concerned about undershooting their inflation mandates. figure 4 – headline consumer price inflation ( cpi ) across selected economies % change yoy - 1 united kingdom canada united states euro area new zealand australia source : federal reserve bank of st. louis, economic data ( fred ) the pandemic has tipped this concern on its head. central banks are now signalling and undertaking policy tightening. these policy responses vary across countries based on their starting point measures of inflation and policymakers ’ own assessment of inflationary risks. table 1 – comparisons of central bank starting points ( 2019 – 2021 ) country cpi ( 2019 y / y % ) cpi ( 2021 y / y % ) unemployment % unemployment % new zealand 1. 9 5. 9 4. 1 3. 2 australia 1. 8 3. 5 5. 0 4. 2 united states 2. 3 7. 0 3. 6 3. 9 united kingdom 1. 3 5. 4 3. 8 4. 1 euro area11 1. 3 5. 0 7. 5 7. 0 sources : statistics new zealand, australian