I am not aware of any evidence suggesting that misalignment between a central bank’s balance sheet and a transition path compatible with the Paris Agreement might be helpful to securing price stability. On the contrary, available evidence points in the opposite direction.
Aligning ourselves with a status quo biased against Paris-compatibility risks adding to macroeconomic volatility which would complicate the conduct of monetary policy in pursuit of price stability down the road. As a result, central banks taking climate-related and environmental financial risks into account supports price stability in two ways. First, it contributes to preserving the soundness of central banks’ balance sheets.