achieved annual cpi inflation within our 1 - 3 percent target range now. such a policy shift would have been inconsistent with the committee ’ s remit and led to many other severe and persistent economic challenges. the committee could have commenced its tightening cycle earlier in 2021 than it did, in order to better contain core ( domestic demand - led ) inflation pressure. however, the subsequent rise in international food and energy prices would still have led to headline cpi inflation exceeding 6 per cent now. chart 1 : cpi inflation split between ‘ core ’ and ‘ headline ’ source : stats nz. the blue bars represent ex - food and energy inflation, an internationally comparable measure of core inflation. these examples are not excuses for inflation not being at 2 percent. they highlight the extent of the economic shocks that buffeted the economy, and the importance of being forward - looking when setting policy, with flexibility in achieving our targets. the lags between our monetary policy actions and inflation outcomes remain long and highly variable. other central banks are in the same boat, and we are learning the lessons together. in an absolute sense, actual and expected inflation is too high and needs to be reduced. however new zealand is in a strong macroeconomic position relative to most oecd nations. chart 2 – international inflation and unemployment rates note : the data are sourced from the oecd database. the latest available data points have been used ; inflation data for 2022q3 for all countries, and unemployment data for 2022q3 for all countries except switzerland for which 2022q2 data is used. turkey has been omitted since it is an outlier with an exceptionally high inflation rate of 81 %. we are in the lowest quartile for both inflation and unemployment in the oecd. we have a stable and well - functioning financial system that is resilient to a wide range of interest rate and employment shocks. 3 and, as outlined in our statement released yesterday, we have resilient household, public, and business sector balance sheets in aggregate. now turning to the monetary policy statement. the monetary policy committee yesterday increased the official cash rate ( ocr ) from 3. 5 percent to 4. 25 percent. the committee agreed that the ocr needs to reach a higher level, and sooner than previously indicated, to ensure inflation returns to within its target range over the medium - term. core consumer price inflation is too high, employment is beyond its maximum sustainable level, and near - term inflation expectations have risen. _

trade in the asia / pacific region, so indirect effects are likely. international markets are an important source of funding for our domestic banks. although new zealand banks are currently well funded, bank funding costs are likely to increase to some degree over the coming year. this is likely to put some upward pressure on retail interest rates relative to the official cash rate ( ocr ). monetary policy will need to take account of such pressures. the reserve bank ’ s new prudential liquidity policy, introduced in 2010, has helped to reduce this vulnerability of the banks to liquidity shocks, by requiring banks to hold more “ core funding ” ( i. e. retail deposits and long - term wholesale funding ). however, the underlying vulnerability will remain until new zealand achieves a sustained improvement in national savings. part 2 : the domestic earthquake crisis while the whole world is focused on the european crisis, new zealand has been suffering from its own domestic dramatic events – the canterbury earthquakes. the earthquake to date the earthquakes have been a debilitating, chronic event, with a profound human and economic impact that will continue to be felt for many years. it has been 16 months since the first of the major earthquakes. the location and timing of the quakes has been quite acute. there has been an unusual propensity to liquefaction. significant aftershocks are still occurring – there have been more than 400 greater than richter magnitude 4, including more than 40 greater than richter magnitude 5 since september 2010 – and this has been a shock to everyone ’ s hopes for recovery and rebuilding. the scale of impacts and ongoing activity means the rebuild is unprecedented. the reserve bank is interested in the ongoing economic effects of this shock and how we expect rebuild to happen. bis central bankers ’ speeches i will focus on the economic effects and what we expect to happen, and the limitations surrounding what we are doing. to date, demolition has progressed and basic repairs have begun, and this will continue for some time. however, widespread reconstruction is on hold while aftershocks continue. when it does begin, major reconstruction is assumed to take more than five years, with housing and essential infrastructure first. reconstruction of commercial structures could be even more protracted. the availability of insurance has been an important factor in the timing of the rebuild. there are some unique or unusual aspects ( e. g., cbd closure, building code changes, land remediation, damage on damage ) which mean that assessing the value of claims is