MNI BRIEF: Fed Studying Climate Change Impact On Dual Mandate

The Fed will continue to explore how climate change poses risks to markets and the central bank's dual mandate, Andreas Lehnert, director of the division of financial stability at the Fed board of governors, said Thursday.

"Just as with financial stability there is the potential for some of these risks and events and potential amplification mechanisms to cause a miss on the dual mandate so it is incumbent to understand that set of risks," Lenhnert said. Earlier this month the Fed formally called out climate change as a risk for the first time in its semiannual report on financial stability.

"Markets can be fairly nonlinear when it comes to novel risks," Lehnert said in a discussion at an OMFIF event. "All these things interact with the classic vulnerabilities."