Federal Reserve Chairman Jerome Powell said today that the Fed needs to avoid “mission creep” if it wants to maintain the public’s trust, and that includes avoiding taking a position on climate change. Speaking at the Stanford Graduate School of Business in California, Powell reiterated that the Fed board still expects to begin to ease the federal funds rate later this year. He also spoke about the Fed’s efforts to increase its transparency and accountability to the public, saying both are fundamental for any government agency, “but are especially important for one granted policy independence.”
That public trust can be maintained only if the Fed avoids mission creep, Powell said. Fed policymakers are often pressed to take a position on issues that are arguably relevant to the economy but are not within the agency’s mandate, such as tax and spending policy, immigration policy, trade policy and climate change, he added.
“Policies to address climate change are the business of elected officials and those agencies that they have charged with this responsibility,” Powell said. “The Fed has received no such charge. We do, however, have a narrow role that relates to our responsibilities as a bank supervisor. The public will expect that the institutions we regulate and supervise will understand and be able to manage the material risks that they face, which, over time, are likely to include climate-related financial risks. We will remain alert to the risk that there will be pressure to expand that role over time. We are not, nor do we seek to be, climate policymakers.”
