Policy Uncertainty from a Central Bank Perspective

In this article, I argue that a substantial portion of macroeconomic policy uncertainty derives from the external environment, which propagates into uncertainty about actual policy. I also illustrate elements of the Reserve Bank of New Zealand's monetary policy framework that aim to mitigate uncertainty, highlighting our clear objectives, regular decision‐making cycle and active communication strategy. Lastly, I leave researchers with two questions: What measures of uncertainty should be pre‐eminently important to policy‐makers? And how should policy‐makers respond to those measurements?