Reserve Bank of New Zealand Monetary Policy Committee member Prasanna Gai warned that global forces are reshaping the economic landscape and clouding the outlook, arguing that policymakers must adapt to a world marked by geopolitical friction, climate risks and ongoing supply-chain strains.
Speaking at the Ethnic Xchange Symposium in Auckland, Gai said the world is moving into a new era of international trade, where the “rewriting of the rulebook” is creating heightened uncertainty for households, businesses and policymakers. That instability, he argued, requires central banks to be more innovative in how they design policy frameworks.
Gai stressed that when the outlook becomes murky, monetary policy needs to anchor expectations with a stable, conditional narrative that helps guide behaviour. Central banks, he said, “must set the tone for the economic conversation” by shaping how millions of decisions are made, rather than merely reacting to short-term developments.
He added that fiscal policy also carries greater responsibility in this environment, and must be grounded in clarity, coherence and long-term strategic thinking to support the broader economic path.
