NGFS publishes report on key takeaways from monetary policy survey

The NGFS released a report titled „Monetary policy and climate change: key takeaways from the membership survey and areas for further analysis,“ which examines feedback from 55 central banks across different regions and stages of development. The report investigates the implications of climate change and the transition to net zero on economies and monetary policies, as well as steps taken to integrate climate change considerations into monetary policy frameworks.
The survey revealed that over half of the responding central banks are actively working on or planning macroeconomic analyses to understand the impacts of climate change on monetary policy relevant horizons. Climate change and the net zero transition have already affected economies, with around half of the surveyed central banks reporting damage from chronic physical impacts and around 70% experiencing damages from acute climate events over the past decade.
Governments play a key role in setting and implementing climate policies, signaling their intent to transition towards net zero. About one-third of central banks, especially in advanced economies, noted that they are already experiencing macroeconomic impacts due to the transition, and around half expect impacts over both the short and medium-to-long term.
Understanding these macroeconomic impacts has become a priority for central banks. Over half of the respondents, split between advanced economies and emerging markets, are working on understanding physical impacts, and a similar proportion, concentrated among advanced economies, are studying transition impacts using existing models.
Regarding the implementation of monetary policy, approximately 40% of respondents have integrated climate change considerations into their operational frameworks, with many considering further steps, particularly to protect their balance sheets from climate-related financial risks.
However, the report highlights that considering climate change in the context of monetary policy is still in its early stages, and central banks need to improve their policy toolkits. There is a strong interest among central banks to collaborate, enhance modeling capabilities, and better understand the impacts of both physical and transition effects on key variables and relevant transmission channels.
The NGFS plans to continue leveraging its expertise as a collective source of learning to help central banks address climate change and the net zero transition in the context of monetary policy and provide them with the necessary tools for understanding and responding to these challenges.