The world’s most powerful central bank should not get involved in the business of climate change, Jerome Powell has said, in a veiled rebuke at rate-setters in the UK and Europe who have pushed green policies.
Powell, the head of the US Federal Reserve, said “we should ‘stick to our knitting’ and not wander off into policy areas” that were not related to its target of keeping inflation at moderate and stable levels. [emphasis, links added]
“We are not, and will not be a ‘climate policymaker’ ”, Powell told an audience of central bankers in Sweden.
His remarks clearly distinguish the Fed’s approach to climate change from other central banks such as the Bank of England and European Central Bank, who have taken a more activist role in promoting green goals.
The former Bank of England governor Mark Carney pioneered the Bank’s shift towards assessing climate-related risks to the economy and financial stability in 2015.
This has been followed up by the European Central Bank (ECB), which under its president, Christine Lagarde, has made climate change a priority for the institution, calling on the bank to “incorporate climate change into everything we do.”
Powell pushed back against the idea that climate policies were the preserve of central bankers, calling it an area for politicians to legislate on.
“Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public’s will as expressed through elections,” Powell said.
The Fed is unique among major central banks by having two explicit targets: controlling inflation and ensuring full employment.
By contrast, the ECB has a price stability mandate and a secondary target to support the “general policies” of the eurozone, which since 2019 include the transition to net-zero emissions.
“The public reasonably expects supervisors to require that banks understand, and appropriately manage their material risks, including the financial risks of climate change,” Powell said.
“We should not be getting ahead of where the public is in terms of the mandate,” he added.
Read more at The Times
J. Powell is pulling his punches on renewables. Paying more for less is inflationary. He has the pulpit and the security of a second term.
As for Mark Carney, he should wear a skirt. I’m really disappointed in her.
You got me chuckling over your Carney remark :-). Western societies seem to be piling one delusion on another, relying on gullibility and reluctance to think clearly. I hadn’t thought much about Jerome Powell, but he sounds a lot more sensible than most.