Skip to content

Why the Fed should treat climate change’s $150B economic toll like other national crises it’s helped fight

People in this story

Bird's eye view of the wildfire destroyed town of Lahaina, Hawaii.

The Conversation, November 2023

Climate disasters are now costing the United States US$150 billion per year, and the economic harm is rising. The real estate market has been disrupted, as home insurance rates skyrocket as wildfire and flood risks rise with the warming climate. Food prices have gone up with disruptions in agriculture. Health care costs have increased as heat takes a toll. Marginalized and already vulnerable communities that are least financially equipped to recover are being hit the hardest.

Despite this growing source of economic volatility, the Federal Reserve – the U.S. central bank that is charged with maintaining economic stability – is not considering the instability of climate change in its monetary policy. Earlier this year, Fed Chair Jerome Powell declared unequivocally: “We are not, and we will not become, a climate policymaker.”

Powell’s rationale is that to maintain the Fed’s independence from politics and political cycles, it should use its tools narrowly to focus on its core mission of economic stability. That includes price stability, meaning keeping inflation low and maximizing employment. In Powell’s view, the Fed should stay away from social and environmental concerns that are not tightly linked to its statutory goals.

Continue reading at The Conversation.

More Stories

Anti-abortion activists.

Republicans’ abortion platform is more “wink and a nod” than clear policy

Bioreactors that host algae.

To help with climate change, carbon capture will have to evolve

Northeastern logo

Pelosi’s new effort to convince Biden to go

All Stories