The price of inaction: what a hotter climate means for monetary policy

By Friderike Kuik, Wolfgang Modery, Christiane Nickel and Miles Parker

A hotter climate leads to more frequent and more devastating extreme climate events – at significant economic costs. Current global efforts to prevent climate change fall far short of what is necessary to prevent catastrophic consequences. This blog describes how a changing climate adversely affects the economy. As such, climate change could hinder central banks as they go about delivering on their primary mandate of price stability.