Navigating uncertainty in the global economy: central bank challenges in an era of change

Remarks prepared for delivery by Mr Tao Zhang, BIS Chief Representative for Asia and the Pacific, at the 41st Nomura Central Bankers Seminar in Kyoto, Japan, 25 March 2025.

The global economy is facing mounting uncertainties, from rising tariffs and geopolitical tensions to structural issues like ageing populations, high debt levels and low productivity growth. Central banks must navigate divergent inflation paths, volatile financial markets and uneven growth across regions. While the United States and euro area contend with policy and trade uncertainties, Asia remains relatively resilient, though not immune. China's economic rebalancing faces headwinds including weak consumption and higher debt. At the same time, artificial intelligence offers transformational potential, promising productivity gains and reshaping central bank operations. However, its adoption also raises concerns around data governance and financial stability. The future demands central banks remain adaptive, realistic in their goals and transparent in communication. Traditional tools must be complemented by macroprudential policies and collaboration across stakeholders. As the world evolves rapidly, embracing innovation while safeguarding stability will be critical to navigating the complex challenges ahead.