can deliver valuable insights, and this is being applied to challenges associated with the current global economic and financial developments. it means that central banks are in a position to modify their perspectives and policies as new analysis and data becomes available. in the end, judgement is inevitably involved in balancing a range of risks and uncertainties. some of these lie beyond the influence of the central bank, while others can be addressed or moderated through monetary policy. policy decisions inevitably involve reflection and pragmatism in managing different trade - offs. we remain committed to the inflation goals in the policy targets agreement. our present judgement is that the current interest rate track, involving an expected 35 basis points of further interest rate cuts, balances a number of risks weighing on the economy while generating an increase in cpi inflation back towards the midpoint of the 1 to 3 % target range. we do not believe that the outlook and balance of risks warrants a position of no policy change, nor a position of rapid easings. if the emerging information and risks unfold in a manner that warrants a change in our judgements, we will modify our policy settings and bis central bankers ’ speeches

graeme wheeler : monetary policy challenges in turbulent times speech written by mr graeme wheeler, governor of the reserve bank of new zealand, and delivered by mr john mcdermott, assistant governor of the reserve bank of new zealand, for the otago chamber of commerce, dunedin, 23 august 2016. * * * i will discuss some of the main challenges confronting central banks in conducting monetary policy, particularly in small open advanced economies. the scope and influence of monetary policy in these economies is heavily constrained by economic and financial developments outside their borders. as a result, expectations of what monetary policy can achieve often run ahead of reality. i will then discuss some of the alternate views around an appropriate strategy for managing monetary policy in new zealand under current circumstances. i will conclude by discussing the reserve bank ’ s current policy strategy. in doing so, i will draw heavily on and emphasise the messaging contained in the recently released august monetary policy statement. i ) challenges faced by central banks in implementing monetary policy nearly ten years on from the start of the global financial crisis ( gfc ), growth remains disappointingly weak in many regions. the imf ’ s latest world economic outlook is appropriately titled “ too slow for too long ”. it includes further downgrades in 2016 – 2017 growth projections for all the major economies, and for many emerging and developing economies. tangible downside risks were identified, and the projections were shaded down further in july revisions. a similar picture emerges in the oecd ’ s latest economic outlook, which highlights the “ self - fulfilling low growth trap ” that has enveloped the global economy. central banks face a difficult global economic and financial environment : • global economic growth remains significantly below its long - term average despite unprecedented monetary accommodation. 1 the rate of potential output growth across the advanced economies has slowed due to lower growth in total factor productivity and weak growth in the capital stock. 2 output growth in the emerging markets has also slowed ; • the volume of global merchandise trade ( which is a strong catalyst for global economic growth ) has drifted lower since the start of 2015. in an environment of weak economic growth and reduced trade volumes, trade restrictions in g20 countries have global gdp growth has averaged 3. 8 percent per annum since 1961. the decline in output from the pre - gfc trend path of gdp has been 15 percent or more in several countries. global growth in 2015 was 3 percent, the weakest since 2009, and below trend growth of 3. 8 percent. potential output growth per capita in the