# Inflation fighting central bankers air climate role doubts Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-01-10 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Central Bankers Concerned about Tackling Climate Change Meta Description: Central bankers including Federal Reserve chief Jerome Powell worry about being tasked with tackling climate change amidst inflation concerns. Powell URL: https://financedigest.com/inflation-fighting-central-bankers-air-climate-role-doubtshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-01-10t110149z1lynxmpej090b9rtroptp4usa-fed-jacksonhole-1736814589330-compressed.jpg) By Francesco Canepa and Lindsay Dunsmuir STOCKHOLM (Reuters) -Some of the world’s top central bankers aired concerns about being expected to tackle climate change as well as tame inflation on Tuesday, with Federal Reserve chief Jerome Powell saying the U.S. central [bank needed](https://www.financedigest.com/bank-of-england-still-needs-to-see-the-job-through-on-inflation-pill.html "Bank of England still needs to ‘see the job through’ on inflation: Pill") to stay out of politics. We should ‘stick to our knitting’ and not wander off to pursue perceived [social benefits that are not tightly linked](https://www.financedigest.com/31972social-engineering-in-the-financial-services-people-are-the-weakest-link-in-the-security-chain.html "Social engineering in the Financial Services : People Are The  Weakest Link in the Security Chain") to our statutory goals and authorities,” Powell told a conference of central bankers organised by Sweden’s Riksbank in Stockholm. We are not, and will not be, a ‘climate policymaker’,” said Powell, with the [Fed’s balancing act yet more delicate since the Republicans took control](https://www.financedigest.com/dollar-buoyant-as-robust-u-s-data-keep-fed-hawks-in-control.html "Dollar buoyant as robust U.S. data keep Fed hawks in control") of the House of Representatives. Momentum behind policy action on climate [change has waned since global talks](https://www.financedigest.com/talk-to-me-the-changing-face-of-customer-communications.html "TALK TO ME :THE CHANGING FACE OF CUSTOMER COMMUNICATIONS") in 2021 as policymakers shifted their focus to the impacts of war in Ukraine, a cost of living crisis and energy crunches that have triggered new fossil fuel investments. Raising borrowing costs to cool [inflation was also reducing the scope for financing](https://www.financedigest.com/how-finance-leaders-can-turn-the-inflation-challenge-into-opportunity.html "How finance leaders can turn the inflation challenge into opportunity") the green transition through the kind of lending schemes and asset purchases that central banks deployed in the past decade, when prices were too sluggish. Powell’s comments were echoed by Mervyn King, a [former governor of the Bank of England](https://www.financedigest.com/bank-of-england-fines-former-tsb-executive-over-2018-it-failure.html "Bank of England fines former TSB executive over 2018 IT failure"). 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](https://www.financedigest.com/inflation-trumps-financial-risks-as-central-bank-tightening-set-to-continue.html "Inflation trumps financial risks as central bank tightening set to continue") independence,” King said. They were in a minority in a conference packed with central bankers who had long accepted they had some duty towards the environment and, in many cases, were already taking some steps. These included stress tests on whether banks are prepared to handle climate-related risks, dedicated lending schemes and [bond purchases tilted towards less polluting](https://www.financedigest.com/ecb-can-cut-carbon-footprint-by-shedding-bonds-of-biggest-polluters.html "ECB can cut carbon footprint by shedding bonds of biggest polluters") sectors. ‘SCAPEGOAT’ While reluctance from the world’s most powerful [central bank](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming") may embolden opposition to climate initiatives, European Central Bank board member Isabel Schnabel said the ECB should step up its efforts to make its monetary policy more climate-friendly, possibly by harnessing its multi-trillion-euro stock of bonds. It would be misleading to use tighter [financing conditions as a scapegoat for further delays in the green](https://www.financedigest.com/how-is-green-finance-reshaping-the-banking-industry.html "How is green finance reshaping the banking industry?") transition,” Schnabel said. This drew immediate pushback from fellow ECB policymaker Pierre Wunsch, who said it was the job of governments to fight climate change and that the [central bank](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks") for the euro zone should not be correcting a failure to act by others. By saying we have a [role to play in helping to finance](https://www.financedigest.com/theres-nothing-artificial-about-the-role-of-ai-and-data-in-the-finance-industry.html "There’s nothing artificial about the role of AI and data in the finance industry ") the green transition… we are increasing this misunderstanding of what our role is,” said Wunsch, Belgium’s [central bank](https://www.financedigest.com/dollar-skulks-at-eight-month-low-central-bank-meetings-in-focus.html "Dollar skulks at eight-month low, central bank meetings in focus") governor. Nearly 200 countries [agreed at the COP26 summit in 2021 to improve their emissions-cutting pledges in time](https://www.financedigest.com/nissan-and-renault-agree-to-overhaul-alliance-this-time-as-equals.html "Nissan and Renault agree to overhaul alliance, this time as equals") for COP27, but only two dozen countries had done so by last November. Even the Bank of Japan, which last year rolled out a [funding scheme targeting activities aimed](https://www.financedigest.com/british-ev-startup-arrival-gets-300-million-funding-aims-to-slow-cash-burn.html "British EV startup Arrival gets 0 million funding, aims to slow cash-burn") at combating climate change, struck a cautious tone, with governor Haruhiko Kuroda stressing central bankers should be careful not to overstep the mark. Singapore’s Ravi Menon, meanwhile, said central [bankers should do much more to help the economy reduce its emissions than just focussing on the risks](https://www.financedigest.com/financial-risks-of-climate-change-overplayed-senior-hsbc-banker-says.html "Financial risks of climate change overplayed, senior HSBC banker says"). We need to get a lot more imaginative and creative if we want to make sure that what we do is consistent with the global objective of getting to net zero,” Menon, the [managing director](https://www.financedigest.com/anya-libova-joins-apester-as-uk-managing-director.html "Anya Libova joins Apester as UK Managing Director") of the Monetary Authority of Singapore, said. (Additional reporting by Simon Johnson and Leika Kihara; Editing by Balazs Koranyi, Susan Fenton and Alexander Smith) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---