Overview
As the NGFS noted it in 2019, climate change and mitigation policies will increasingly affect key macroeconomic variables for the conduct of monetary policy across many different time horizons. Since climate change could blur a central bank’s assessment of its policy space and affect the transmission channels of monetary policy, the NGFS advocates that central banks need to reinforce their analytical toolkit.
The NGFS created the Workstream on Monetary Policy to deepen the collective understanding of how climate change, and the actions designed to mitigate it, should be considered in relation to the conduct of monetary policy. The Workstream also explores what options central banks have to take into account climate-related risks and, where applicable, what options central banks have to ensure monetary policy operations are supportive of the transition to a low-carbon economy.
Over the course of its 2024-2026 work programme, the Workstream has explored how the macroeconomic impacts of climate change can be integrated into monetary policy decision-making and strategy within the existing mandates and monetary policy frameworks. It has also launched a capacity-building initiative to enhance climate modelling capabilities across the Network.
For the 2026-2028 work programme, the Workstream will focus on developing implementation tools. After increasingly strengthening the understanding of how climate change impacts macroeconomic variables relevant to the conduct of monetary policy, members called for greater action on practical implementation and on-the-ground application.
Chairs’ institutions
The workstream is chaired by Mr. Oystein Borsum (Norges Bank) and Ms. Anne Marcussen (Danmarks Nationalbank)