“Restoring price stability at a time of high inflation may require unpopular short-term measures such as we raise interest rates to slow the economy,” Powell said in prepared remarks to a forum on central bank independence sponsored by the Riksbank. Directly on our decisions allows us to take these necessary actions without taking into account short-term political factors.”
But, he added, “We must ‘stick to our goals’ and not tire ourselves out in pursuit of perceived social benefits that are not closely related to our goals and legal powers… Adopting new goals, whatever their merit, without a clear legal mandate would undermine the cause of our independence.”
Powell said there is a “great understanding and broad acceptance” of the need for the US central bank to manage inflation by raising interest rates and other policies, which is embodied in a federal law tasking the bank with maintaining maximum job opportunities and price stability.
However, Powell said that the central bank’s regulatory powers give it a role to ensure that financial institutions understand the potential risks they face from climate change, and that “without explicit legislation from Congress it would not be right for us to use our monetary policy or our supervisory tools to promote a green economy at all.” Towards a greater extent or to achieve other climate-related goals. We are not climate policy makers and we will not be.”
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