Powell Supports ‘Consistent’ Guidance for Managing Climate Risk

While the Federal Reserve is not planning to join onto forthcoming OCC guidance for large firms on managing climate risk, Fed Chairman Jerome Powell signaled that he would be open to coordinating the other banking agencies to ensure a consistent regulatory framework around climate risk, and that the Fed could also move to issue its own guidance in the future.

“We’re very much tracking and in discussions with the OCC,” Powell said during testimony before the House Financial Services Committee today. “All the agencies want to have consistent—or identical, ideally—guidance,” he said. “I don’t think we’ll be in a position to join [the OCC’s]guidance at this time, but we’ll get there.”

Powell said that within the Fed’s mandate to supervise and regulate banks and ensure financial stability, “we will be incorporating climate change very much into those mandates,” but that from a monetary policy standpoint, there are no current plans to have climate risk guide monetary policy, as some other jurisdictions have begun to do. “We’re not doing that now,” he said. “I think that’s something we’ll do in the longer run, but not now.”