Federal Reserve Chief Jerome Powell: Climate Change Threatens Global Economy

WASHINGTON, DC - DECEMBER 02: Federal Reserve Chairman Jerome Powell answers a question during a House Financial Services Committee oversight hearing to discuss the Treasury Department's and Federal Reserve's response to the coronavirus (COVID-19) pandemic on December 02, 2020 in Washington, DC. Treasury Secretary Steve Mnuchin is also scheduled to …
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Federal Reserve Chairman Jerome Powell said Friday climate change is a threat to the global economy and called for the United States to lead a coordinated response to that threat.

“There is no doubt that climate change poses profound challenges for the global economy and certainly the financial system,” Powell said in remarks made virtually at the Green Swan Conference.

The conference website describes its mission:

The Bank for International Settlements, Bank of France, International Monetary Fund and Network for Greening the Financial System are joining forces to co-sponsor a truly unique global virtual conference on “How in practice can the financial sector take immediate action against climate change-related risks?”

CNN reported on Powell, who has served under Presidents Barack Obama, Donald Trump, and Joe Biden:

Powell said the Fed sees its role in the climate crisis as “an important one tied tightly to existing mandates.” The climate crisis could create financial risks that would fall into the Fed’s responsibilities for supervising banks and monitoring financial stability.

The Fed chief said the global response will require “bold steps and decades of sustained efforts” by national authorities, international groups and the private sector.

Although Powell acknowledged the U.S. central bank will play a role here, he stressed that the overall response from the American government, particularly around collaborating with other nations, is “not a question for the Federal Reserve.”

“In the United States, our society’s overall response to addressing climate change will have to come from elected officials who have sought and received a mandate from voters,” Powell said.

Powell said climate change could impact the broader economy, including inflation, jobs, and the financial sector.

“All of those things affect unemployment, inflation and interest rates over time,” Powell said. “Today, climate change is not something we directly consider in setting monetary policy.”

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