Powell: Fed has only narrow role to play on climate change – Los Angeles Times

by | Jan 10, 2023 | Climate Change

The Federal Reserve has only a limited role to play in combating climate change, Chair Jerome Powell said Tuesday, a stance that puts him at odds with environmental activists who have pushed central banks worldwide to take steps to restrict lending to energy companies. Maintaining the Fed’s independence, Powell said, includes steering clear of issues that are more properly overseen by elected officials. “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 said during a panel discussion in Stockholm on the subject of central bank independence.Advertisement“We are not, and will not be, a ‘climate policymaker.’ ”In his remarks, Powell suggested that the Fed’s independence from social and political influences was particularly important when it must carry out unpopular policies, such as when it raises interest rates, as it’s doing now to fight high inflation. Last year, the Fed raised its benchmark rate seven times, a series of hikes that have led to higher rates for mortgages and auto loans and made other business and consumer borrowing more expensive.“Restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” the Fed chair said. “The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors.”Climate activists have pushed central bank …

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