Macroeconomic effects It is not enough to link to newspaper reports, nor to quote a World Economic Forum report, that has ranked climate risks as both high-impact and high-likelihood events3 in order to create a new mandate or objective for a central bank.4 Is there convincing evidence for us to adjust our monetary policy strategy because increased risks of more frequent and more devastating future climatic events could influence economic dynamics in the medium term, the monetary policy horizon?
The non-quantified increased probability and causality in such events may only hold implications for short-term developments, which do not influence the conduct of monetary policy. One can also establish the general assumption that climate change may have more longerlasting impacts on potential output and relative prices, but these will also have less bearing on the conduct of policy.