Powell reiterates that the Fed will not become a “climate politician.”

Jerome H. Powell, Chairman of the Board of Governors of the Federal Reserve System, participates in a panel during a central bank symposium at the Grand Hotel in Stockholm, Sweden January 10, 2023.

Claudio Bresciani | TT | via Reuters

Federal Reserve Chair Jerome Powell said Tuesday the central bank will not interfere on issues like climate change beyond its mandate set by Congress and vowed the institution will not become a “climate politician.”

Powell’s remarks, delivered at a conference hosted by Sweden’s central bank, follow calls from some Democrats for the Fed to play a more active role in tackling climate change and ensuring the country’s financial system is prepared for climate-related risks.

Powell has reiterated that climate change is not a primary consideration for the Fed in developing monetary policy, noting that climate-related issues apply to the federal government rather than his institution.

“Decisions about taking action to address climate change directly should be made by elected government agencies and thus reflect the will of the public as expressed through elections,” Powell said Tuesday.

“Without explicit legislation from Congress, it would be inappropriate for us to use our monetary policy or regulatory tools to promote a greener economy or achieve other climate-related goals,” Powell said. “We are not and will not be ‘climate politicians’.”

In recent years, the Fed has tiptoed to addressing climate change, including creating two internal committees to look into the issue. It has also joined the Network for Greening the Financial System, a group of global central banks aiming to address the systemic risks of climate change for the financial sector.

But Powell said Tuesday the Fed’s regulatory powers give it a “narrow” role in ensuring financial institutions “appropriately manage” climate-related risks. He added the Fed should “not digress to pursue putative welfare benefits that are not closely related to our statutory goals and agencies.”

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And while the Fed has urged big banks to assess their financial preparedness in the event of climate-related disasters, Powell said it is as involved as the institution should be in dealing with climate-related problems.

“The public reasonably expects regulators to require banks to understand and appropriately manage their material risks, including financial risks from climate change,” Powell said.

The Fed is prepared for it start a pilot program This year, six of the country’s largest banks are scheduled to participate in a climate scenario analysis that would examine the ability of companies to cope with major climate events.

— CNBC’s Jeff Cox contributed to the coverage

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https://www.cnbc.com/2023/01/10/powell-reiterates-fed-is-not-going-to-become-a-climate-policymaker.html Powell reiterates that the Fed will not become a “climate politician.”


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