June 22 (Reuters) – Climate change poses a “significant risk” to the global economy and the financial system, San Francisco Federal Reserve Chairman Mary Daly said on Tuesday, adding that large swathes of the United States could be disturbed.
The economic math with the effects of climate change – from how people work on crops that can be cultivated to property damage and capital investments – can also be unevenly felt in communities, Daly said in comments. remarks prepared for delivery at a virtual event at the Peterson Institute for International Economics.
“As policymakers our job is to navigate this uncertainty,” she said. “No one really knows the severity and extent of climate change, where and who will be most affected, or the nature, extent and duration of our response to risks.”
Republicans have criticized the US central bank for looking into the effects of climate change, saying it distracts it from its Congress-mandated work of pursuing full employment and stable prices.
Daly argued on Tuesday that climate change can and does affect both jobs and prices, and that understanding its effects is, therefore, up to the Fed.
It could even affect the savings rate, labor productivity and capital investment, she said, potentially lowering the long-term neutral interest rate, which would give the Fed a margin of reduced maneuver to combat future economic downturns with conventional monetary policy.
“The Fed and all central banks must also look to the future, respond to the risks we see today, while anticipating those that have not yet manifested,” she said.
Reporting by Ann Saphir Editing by Paul Simao
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