Mother Jones - November 9, 2019
During a conference on climate change and the economy in San Francisco, one year after the deadly Campfire’s wildfire smoke made the city’s air quality among the worst on the planet, the Federal Reserve announced that it would incorporate climate change into its considerations when making policy decisions. The choice stands in stark contrast with the Trump administration, which maintains that climate change is a hoax despite overwhelming evidence to the contrary. The announcement was made during a speech by Fed Governor Lael Brainard, who said taking climate change seriously would be central to the future of the US economy.
Ann Saphir reported on the announcement for Reuters:
“To fulfill our core responsibilities, it will be important for the Federal Reserve to study the implications of climate change for the economy and the financial system and to adapt our work accordingly,” Fed Governor Lael Brainard said in remarks released at the start of the Fed’s first-ever conference on climate change and economics.
The Fed, she said, will need to look at how to keep banks and the financial system resilient amid risks from extreme weather, higher temperatures, rising sea levels and other effects of the accumulation of greenhouse gases in the atmosphere.
And increasingly, she said, “it will be important for the Federal Reserve to take into account the effects of climate change and associated policies in setting monetary policy to achieve our objectives of maximum employment and price stability.”
But what does this announcement mean, in a practical sense? Monolithic financial institutions don’t typically turn on a dime, and according to David Wessel, director of the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institute, this will not result in different actions by the Fed in the near term. The task of implementing new monetary policy is deliberate and incremental, but that doesn’t mean this announcement isn’t notable. “The significance isn’t that it’s gonna change anything on regulation, supervision or monetary policy,” Wessel says. “They stopped pretending that this is someone else’s problem.” ...
Read full report at Mother Jones