MNI: Fed, PBOC, ECB - Climate Risks To Influence Future Policy

The Fed, PBOC and ECB, addressing the Green Swan conference hosted by the BIS, made a rare show of unity Friday in saying climate change is an emerging risk clearly within the scope of their mandates to manage inflation and financial stability.

Central bankers would be "failing in our mandate" by not accounting for climate change, ECB chief Christine Lagarde said at a BIS panel discussion. Rising temperatures can make the economy and inflation more volatile, alter the value of assets that central banks hold and raise issues in banking supervision so "we are squarely in our mandate" to tackle such risks, she said.

Yi Gang of the People's Bank of China said the issue requires "urgency" in shifting production and consumer spending. Inflation pressures may shift in the move from treating pollution as free to something that must be paid for and there are financial risks around the transition from coal to green energy, he said. Fed Chair Jerome Powell said most climate work is for governments and isn't directly considered in current monetary policy. Climate risks fall under the Fed's banking supervision and "there's no question that climate change has the potential to affect the structure of the economy over time."