*  *  *  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.