Other central banks, such as the Bank of England, became aware of it earlier than we did. For one, climate change needs to be integrated into financial sector supervision, taking into account the risks it poses for certain sectors of activity and financial securities, and we need to reflect on its consequences for monetary policy.
If we raise rates too much, we could drive the economy into an unnecessarily painful recession and undershoot the inflation target. If we don't raise them enough, inflation will remain elevated, and households and business will come to expect persistently high inflation. With inflation running well above target, this is the greater risk.