Heightened economic and policy uncertainty and its implications for the macroeconomy and financial stability in the Americas (2025-26)

Rising economic and policy uncertainty coupled with geopolitical tensions can have wide macro-financial implications in the Americas. In the domestic context, such uncertainty can impact key economic variables, including consumption, investment, consumer and business sentiment, inflation, exchange rates and equity markets. In the international context, increased economic and policy uncertainty in foreign countries can impact the economies of the Americas by affecting their external demand, capital flows, exchange rates and asset prices. Further, geopolitical or policy-related tensions can have significant effects on trade, foreign direct investment, banking and portfolio flows to these countries. Heightened uncertainty poses challenges for monetary policy not only because of its consequences on the economy but also due to the need to adapt analytical approaches in innovative ways such as developing new measures of uncertainty and financial conditions or how to incorporate these factors into the central bank's models.

In March 2025, the BIS Consultative Council for the Americas (CCA) launched its seventh Research Network for 2025–26 focusing on the implications of heightened economic and policy uncertainty for the macroeconomy and financial stability in the Americas. The Network seeks to: 1) help central banks produce high-quality research papers on the impact of heightened uncertainty on the economies of the Americas; and 2) enhance the technical capacity of CCA central banks so that they can better study these issues going forward.

The Network comprises senior researchers from seven central bank members of the CCA – Argentina, Canada, Chile, Colombia, Mexico, Peru and the United States (both the Federal Reserve Bank of New York and the Federal Reserve Board). It has convened regularly to hold bilateral virtual meetings between academic advisers and the authors, as well as workshops with all members to gather feedback and advance the projects.

The network was chaired by Alejandrina Salcedo of the Bank of Mexico in 2025 and will be chaired by Adrian Armas of the Central Reserve Bank of Peru in 2026. Yuriy Gorodnichenko (UC Berkeley) and Gianluca Benigno (University of Lausanne) serve as the academic advisers for the Network. The work of the Network will conclude with the 16th CCA annual research conference in Peru in the fourth quarter of 2026.