Fed chief Powell: Central banks must not lead fight on climate change

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From Talkshop

January 11, 2023 by oldbrew

Sounds like the old armed forces ‘mission creep’. In any case puny humans won’t get far with ‘fighting climate change’ instead of adapting where necessary, however much money they try to throw around. Stick to the day job!
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Central banks risk undermining independence by wading into social issues and seeking to tackle climate change, the head of the US Federal Reserve has warned.

Jerome Powell said it was essential that institutions “resist the temptation” to wade into “social issues” that go beyond their remit, reports The Telegraph.

His comments are likely to be seen as a rebuke to the Bank of England, which has been criticised by politicians for its approach to climate change.

Threadneedle Street has described managing financial risks from climate change a “key aspect” of delivering its “mission” to “promote the good of the people”. It has also faced accusations of mishandling the inflation crisis by acting too late and slowly.

Mervyn King, who was governor of the Bank of England for a decade until 2013, echoed Mr Powell’s comments on Tuesday, as he warned that central bank independence came with “great responsibility”.

Speaking at the same conference in Sweden, Lord King said: “It cannot be misused by trying to creep into areas which have not been explicitly delegated by the appropriate political process.

“There are plenty of other people who can take measures to combat climate change. And I worry that people in their great enthusiasm for doing good are actually putting at risk central bank independence.”

Mr Powell singled out climate change as an “inappropriate” topic for unelected central bankers to address.

He told the audience in Stockholm: “We should stick to our knitting and not wander off to pursue perceived social benefits that are not tightly linked to our statutory goals.

“We [Federal Reserve] are not and we will not be a climate policymaker.

“Taking on new goals, however worthy, without a clear statutory mandate would undermine the case for our independence.”

The Fed has come under fire in the past from Republicans in Congress who have accused it of overreach when it pledged to consider climate-related financial risks.
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Meanwhile Mark Carney, a former Bank of England governor who is now a special climate envoy for the United Nations, has warned that pension fund investments held by millions of people could become “worthless” unless the financial sector reacts quicker to the climate change crisis.

Full report here.