New York (CNN)Federal Reserve Chairman Jerome Powell acknowledged serious risks the climate crisis poses to the world economy and called for a coordinated response that is led in the United States by elected officials.
“There is no doubt that climate change poses profound challenges for the global economy and certainly the financial system,” Powell said Friday while speaking virtually at the Green Swan Conference.
The Fed chief said the global response will require “bold steps and decades of sustained efforts” by national authorities, international groups and the private sector.
Although Powell acknowledged the US central bank will play a role here, he stressed that the overall response from the American government, particularly around collaborating with other nations, is “not a question for the Federal Reserve.”
“In the United States, our society’s overall response to addressing climate change will have to come from elected officials who have sought and received a mandate from voters,” Powell said.
His comments contrasted with European Central Bank President Christine Lagarde’s call for a more concerted intervention by global central bankers.
Powell said the Fed sees its role in the climate crisis as “an important one tied tightly to existing mandates.”
The climate crisis could create financial risks that would fall into the Fed’s responsibilities for supervising banks and monitoring financial stability.
Powell added that eventually the climate crisis could impact the broader economy, including inflation, jobs and the financial sector.
“All of those things affect unemployment, inflation and interest rates over time,” he said. “Today, climate change is not something we directly consider in setting monetary policy.”