a range of shared issues including financial inclusion, technology, and climate change. 1 / 2 bis - central bankers'speeches we retain strong relationships internationally, including with other central banks and regulators, and through relevant international institutions such as the trans - tasman banking council, the south pacific central bank governors, the international monetary fund, the bank for international settlements, and the executives'meeting of east asia pacific central banks. these relationships enable us to support initiatives and meet international standards and best practice. i would like to thank the board, the monetary policy committee, and our leadership team for their support. i am tremendously proud of the people at te ptea matua and all they have achieved. i now welcome your questions. meitaki ma'ata tn koutou, tn koutou, tn koutou katoa 2 / 2 bis - central bankers'speeches

there has been almost no contribution from productivity growth in recent years. 20 this is not unique to new zealand, and is a heavily - debated topic internationally. there are multiple ideas behind waning productivity growth. firstly, there could simply be less innovation now than in the past. 21 or, it may be the case that we just have not utilised recent innovations yet. 22 alternatively, measurement errors may be at play ; for example, it is hard to measure efficiency gains from use of the internet or ict services. 23 e * – equilibrium real exchange rate24 of all the prices within our economy, the real exchange rate is one that is not subject to short - run rigidities. indeed, the real exchange rate can and does move rapidly over time, as economic developments such as a rise in the terms of trade ( figure 4 ) – the ratio of our export prices to import prices – are quickly reflected in its relative price. the fast - moving nature of the real exchange rate means it plays an important role in absorbing shocks to our economy. 25 but while part of the movement in the real exchange rate over time reflects persistent fundamental developments ( such as structural improvements in the terms of trade or changes in relative productivity ), much of the movement in the real exchange rate reflects deviations away from its 5 / 11 bis central bankers'speeches medium - term equilibrium level, e *. this feature of the exchange rate to ‘ overshoot ’ or ‘ undershoot ’ its equilibrium stems from the fact that currencies can react to incoming news instantly, while other prices ( besides interest rates ) are slower to adjust. these deviations may result in mis - allocation of resources between tradable and non - tradable goods. there are various definitions of the equilibrium real exchange rate, which tend to focus on the drivers of the exchange rate over a given time horizon. 26 the medium - term notion of equilibrium tends to be based on the value of the real exchange rate that would be consistent with internal balance ( output at potential ) and external balance ( the current account sustainably financed ). one of the several models that the bank uses is the macro - balance model, which assesses the degree to which the exchange rate is currently too high or too low in order to stabilise the net foreign liabilities ( nfl ) to gdp ratio at its current level. 27 this model indicates that the current level of the real exchange rate is consistent with nfl remaining at about 60 percent of gdp, given the