Knot Says Inflation Goal Always First as ECB Mulls Climate Risks
Knot Says Inflation Goal Always First as ECB Mulls Climate Risks
(Bloomberg) --
Dutch governor Klaas Knot joined his European Central Bank colleagues in arguing that efforts to fight climate change can’t come at the expense of the institution’s main focus on inflation.
Speaking in Amsterdam on Wednesday, Knot said transitioning away from environment-polluting energy sources is the most important challenge for euro-area economies. While the ECB is still “crystallizing” its opinion on how it can contribute, it’s clear that central bankers can’t be leaders in this field.
“The central bank should support climate goals, but the primary goal is price stability,” Knot, a member of the Governing Council, said. “If there’s room to pursue the climate goal, we welcome that, but always subordinate to the primary objective.”
The ECB is coming under pressure to spell out how it plans to respond to global warming, with calls to ban bonds of polluters from its quantitative-easing program growing louder.
President Christine Lagarde told the European Parliament on Monday that fighting climate change will be discussed as part of the ECB’s strategy review. But she tried to temper expectations, saying it won’t become the central bank’s “mandate number one,” a view echoed by Executive Board nominee Isabel Schnabel.
Knot said a lot still needs to be done when it comes to transparency and standards on how environment-friendly assets should be priced. This work should be done by the private sector and not be “internalized” by the ECB.
To contact the reporters on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net;Ruben Munsterman in Amsterdam at rmunsterman1@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow
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