In addition to the complexities of modelling and calculating the impact of climate change on the environment and then on the economy, most of them are based on historical data, and do not consider neither extreme events nor the potential non-linearities that could substantially accentuate the economic consequences of climate change.
Any tendency of inflation expectations to become unmoored or for the Fed's inflation-fighting credibility to be eroded could greatly complicate the task of sustaining price stability and could reduce the flexibility of the FOMC to counter shortfalls in growth in the future. Accordingly, in the months ahead, the Federal Reserve will continue to monitor closely inflation and inflation expectations.