“The Fed does have narrow, but important, responsibilities regarding climate-related financial risks,” Powell said Tuesday in brief prepared remarks on central bank independence at a forum in Stockholm. “But without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals.”
“We are not, and will not be, a ‘climate policymaker’.”
Powell didn’t directly comment on the economic or monetary policy outlook in his prepared text. He did say that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy”.
The Fed chair is three weeks away from the next meeting of the Federal Open Market Committee, which last year raised its benchmark lending rate from near zero to a range of 4.25% to 4.5% to battle high inflation. Officials are eyeing raising rates to above 5% this year, though they may again slow the pace of hikes at the next gathering.
Powell said the Fed’s independence has served the public well, and added that the central bank “must continuously earn” it by achieving its goals and providing transparency to the public and Congress.