STOCKHOLM, Sweden–The Federal Reserve will “not be” a “climate policymaker,” according to its chairman.
Speaking to the Symposium on Central Bank Independence at Sveriges Riksbank in Stockholm, Jerome Powell said the Federal Reserve would remain focused solely on the mandates the agency has been given by Congress: maximum employment and price stability.
Without explicit congressional legislation, “it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals,” Powell told the meeting.
That doesn’t mean the Federal Reserve isn’t paying attention to the issue of climate. Powell said the Fed has narrow but important responsibilities regarding climate-related financial risks.
“These responsibilities are tightly linked to our responsibilities for bank supervision,” Powell said. “The public reasonably expects supervisors to require that banks understand, and appropriately manage, their material risks, including the financial risks of climate change.”
In addition, Powell said it is essential the Federal Reserve stick to its mandate and “resist the temptation” to broaden its scope to address “other important social issues of the day.”
‘Reflect the Public’s Will’
The latter issue is the purview of Congress, Powell stated again.
“Addressing climate change seems likely to require policies that would have significant distributional and other effects on companies, industries, regions, and nations,” Powell said. “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.”
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