Mary Daly, president of the San Francisco Fed, said the impact of climate change on the economy could intensify, losing jobs in fossil fuel-related jobs, hurting companies with exposure to the most affected sectors, and possibly limiting the Fed's ability to use interest rates to guide policy.
"like other risks facing the economy, the Fed has a responsibility to understand the possible trajectory of climate change and the transition period of this evolution," Daly said at an online event hosted by the Peterson Institute for International Economics on Tuesday.
She says the Fed's current role is to listen, study and prepare to adapt to the changes brought about by climate change. Daly noted that rising temperatures and worsening climate events have affected the economy in many ways, calling the risks "known but unknown".
"the risk of climate change is not isolated and not just related to some industries or parts of countries," Daly said. "A large part of the country, as well as all kinds of industries, are very vulnerable."