Fed Officials See Climate Change As Threat to Economy
At the Federal Reserve’s inaugural conference on climate, two central bank policymakers warned that climate change poses current and future risks to the U.S. economy. "Climate change is an economic issue we can’t afford to ignore," said San Francisco Fed President Mary Daly. “The impact of these events go well beyond their immediate disruptions. They can destroy wealth, exacerbate existing income inequalities, and — in the most severe cases — displace people permanently.”
Daly noted that damage from severe weather cost insurers more than $50 billion in 2018 alone, and including uninsured damage nearly doubled that number. Daly listed where the fallout from climate-related events spilled over into the Fed’s core mission, citing potential disruption to the U.S. payment system, ensuring the soundness of the nation’s banks, and implementing monetary policy.
Fed Governor Lael Brainard said that climate change could create uncertainty that held back investment and economic activity and was not something the Fed could ignore. She said, “As policies are implemented to mitigate climate change, they will affect prices, productivity, employment, and output in ways that could have implications for monetary policy.”