US Central Bank President Jerome Powell “believes in climate change” and the Fed is studying how episodes of extreme weather can affect the economy.
“Is the increase in severe weather events due to climate change?” Asked a senator to the Fed boss before the Banking Commission on Thursday. “Yes, I believe so,” replied Mr. Powell.
However, he did not indicate whether the Central Bank had accelerated or modified its research on the impacts of climate on the economy since the multiplication of severe weather events in recent years.
“We did a lot of research at the Fed on bad weather and its effects on the economy,” he said.
“We demand that the financial institutions we oversee have a plan to deal with extreme weather events, especially those in areas at increased risk of bad weather,” he said.
However, he added that climate change was perceived as “a long-term problem” and was not “incorporated overnight” into banking supervision or economic forecasting.
The head of the Fed was also questioned about the contribution of immigration to the US economy while the Trump administration went to war against illegal immigration.
“Whether they enter legally or illegally, these people come to swell our labor power and they certainly contribute to the growth of Gross Domestic Product (GDP),” Powell said.
“Growth is the combination of productivity gains with the increase in the labor force and immigration has contributed half to the growth of our labor force in recent years, so it is important”, he added.
Mr Powell did not want to settle the question of illegal immigration and its effects, in particular on the evolution of wages.
“There have been a lot of studies on the subject and it has not been conclusive, there is research to say that (illegal immigration) does not have much impact and others say that it has a modest effect on wages.