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Fed Chair Powell: ‘We will not be a climate policymaker’

Yahoo Finance’s Jennifer Schonberger breaks down Fed Chair Powell’s speech in Stockholm, Sweden, in which he defended the Federal Reserves actions to rein in inflation and weighed in on climate policy tools.

Video Transcript

RACHELLE AKUFFO: Well, Fed Chair Jay Powell out this morning with remarks out of Sweden, Riks, Riksbank, pointing to the Fed potentially taking unpopular measures in the fight against inflation. Here with the details is Yahoo Finance's Jennifer Schonberger. Of course, everyone always hanging on Chair Powell's words here.

JENNIFER SCHONBERGER: Good morning. That they are. Fed Chair Powell making the case for the Federal Reserve's independence at an event in Stockholm, Sweden this morning. In a speech and subsequent Q&A, Fed Chair Powell appeared to defend the central bank's aggressive interest rate hiking campaign, while framing the Fed's independence as necessary as the Fed looks to tackle bringing down high inflation. Take a listen.

JAY POWELL: The case for monetary policy independence lies in the benefits of insulating monetary policy decisions from short-term political considerations. Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short-term as we raise interest rates to slow the economy.

JENNIFER SCHONBERGER: Palin's comments come as the Fed has raised rates by 4 and 1/4 percentage points over the past year in the most aggressive campaign since the 1980s. Fed Chair Powell has repeatedly warned that while bringing down inflation will be painful, not doing anything and letting inflation fester would be even more painful.

Now, in that speech this morning, Powell said the Fed should resist the temptation to broaden the central bank's scope to include social issues, including climate change. He says without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy. We are not and will not be a climate policymaker, though when it comes to climate change, Powell noted that in his view the Fed has narrow responsibilities to oversee climate risks as it relates to the financial sector. Back to you.

RACHELLE AKUFFO: All right, thank you for that update. Jen Schonberger there for us.