MNI: Fed Won't Use Monetary Policy To Address Climate -Powell
Fed chair makes no comments on the economy or monetary policy in prepared remarks.
The Federal Reserve's role in addressing climate change should be limited to requiring banks to understand and manage financial risks related to global warming, rather than using its monetary or supervisory tools without an explicit mandate from Congress, Fed Chair Jerome Powell said Tuesday.
In remarks prepared for a Riksbank panel on central bank independence, Powell repeated his view that the Fed has "narrow" responsibilities on climate change, a stance for which he faced opposition from Democratic lawmakers during his renomination hearing last year.
"The Fed does have narrow, but important, responsibilities regarding climate-related financial risks. These responsibilities are tightly linked to our responsibilities for bank supervision," he said. "The public reasonably expects supervisors to require that banks understand, and appropriately manage, their material risks, including the financial risks of climate change."
The Fed chair made no comments on economic policy in his prepared remarks.
'CLIMATE POLICYMAKER'
Addressing climate change is likely to require policies that would have "significant distributional and other effects on companies, industries, regions, and nations," he said. These decisions should be made by the elected branches of government.
"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. We are not, and will not be, a 'climate policymaker.'"
The U.S. central bank has been looking at climate stress tests but banks won't face consequences on their results. Some other global central banks have taken more activist roles on the issue in recent years.