Latest news with #Elderson
Business Times
07-07-2025
- Business
- Business Times
ECB warns of impact of heat waves on inflation, GDP growth
[SINTRA, PORTUGAL] The link between heat and key economic indicators such as inflation and gross domestic product is too important to ignore, according to European Central Bank (ECB) executive board member Frank Elderson. 'We have progressed in understanding that accounting for the climate and nature crises is relevant,' he said in an interview. 'If you think about the exceptionally hot summer of 2022, food-price inflation was up between 0.4 and 0.9 percentage points' and 'there was quite a measurable hit on German GDP. So these things are relevant'. The comments coincide with another European heat wave in which much of the region has experienced unusually high temperatures fuelled, by climate change. Scientists have found that a hotter planet has the potential to threaten price stability, in part as crops become more difficult to tend and food prices rise. Against that backdrop, the ECB is now intensifying its efforts to deal with climate-related economic risks. That includes adjustments unveiled last week showing that it will fully take into account not just the implications of climate change, but also 'nature degradation' when setting monetary policy. The decision represents an 'important addition' to the wording used by the central bank, Elderson said on the sidelines of the ECB's annual conference in Sintra, a town just a short drive north of the capital Lisbon. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up The new focus on nature-related risks will eventually feed into various aspects of the ECB's efforts to ensure price stability and to supervise Europe's systemically important banks. The approach is in stark contrast to that of the US Federal Reserve. While Fed chair Jerome Powell has in the past acknowledged the threats that climate change poses to the US economy and financial system, he's also repeatedly stressed that the Fed does not have a mandate to foster a low-carbon transition. 'You heard me say over and over again that we will not be climate policymakers,' Powell said during a press conference in May. 'Our role on climate is a very narrow one.' The Fed's efforts to downplay the relevance of climate change in safeguarding financial stability have also encompassed interventions to water down global standards, including those set by the Basel Committee on Banking Supervision, Bloomberg has previously reported. Even in Germany, Europe's largest economy, there's clear evidence of resistance toward policies promoting climate and human rights considerations. Stiftung Familienunternehmen, a lobby dedicated to defending the interests of family businesses, issued a statement last Friday questioning the constitutionality of incorporating such standards in European regulations. Elderson said that 'while there's a backlash out there', the ECB governing council 'sticks to its guns and actually adds to that to say we now understand on the basis of the work that has been done that we need to think beyond just what climate means for price stability'. The ECB is still studying events such as the summer of 2022 and its impact on inflation and GDP to get a sense of what's ahead, Elderson said. Nature risk, meanwhile, 'is complicated because there is not one single metric like CO2,' he said. Instead, 'you have to look at fish stocks, you have to look at timber, you have to look at the soils, you have to look at water scarcity and water quality'. In the short term, there will be 'more research, more outreach', he said. 'Then we need to ask: what does this mean for our understanding of the economy, for our understanding of inflation? What does it mean for debt sustainability?' Ultimately, the response may be similar to the ECB's efforts to tackle climate risk, he added. 'Whenever we design an instrument or whenever we think about collateral or when we think about tilting of asset purchases at some point in the future, we take this into account,' he said. 'If you were to close your eyes to that, you would also miss an important part of credit risk for at least some of the banks that we supervise.' BLOOMBERG
Bloomberg
15-05-2025
- Business
- Bloomberg
ECB's Elderson Warns Against Scaling Back ESG Rules Too Much
European Central Bank Executive Board member Frank Elderson warned against excessively reducing the ESG reporting and regulatory burden on European companies. 'Reporting requirements in the European Union's sustainable-finance framework are not something 'nice to have,' but a solution to a problem: to improve the availability of reliable and comparable data,' Elderson said Thursday.
Yahoo
12-02-2025
- Business
- Yahoo
ECB's Elderson Says Data More Important Than Neutral for Policy
(Bloomberg) -- European Central Bank Executive Board member Frank Elderson said that incoming economic data is more important for setting monetary policy than the neutral rate of interest. Saudi Arabia's Neom Signs $5 Billion Deal for AI Data Center Nice Airport, If You Can Get to It: No Subway, No Highway, No Bridge The Forgotten French Architect Who Rebuilt Marseille Sin puente y sin metro: el nuevo aeropuerto de Lima es una debacle In New Orleans, an Aging Dome Tries to Stay Super Echoing other ECB officials who also say neutral — a theoretical level than neither stimulates nor restricts economic activity — is of limited use, Elderson said it's 'not such a good guide to short-term policy decisions.' 'It is an important concept to understand the likely long run average interest rate,' he told an event Wednesday organized by MNI. But amid elevated global volatility, 'our time I think is actually best spent understanding how these shocks will affect inflation as opposed to where precisely the natural rate is located.' Elderson also said: 'We are delivering on our price-stability objective. We see a convergence to our target as we want to see it' 'We still subscribe to the view that the conditions for a strengthening of activity remain in place for 2025' 'Over the medium term, a tighter US monetary policy tends to be disinflationary also for the euro area' Why Fast Food Could Be MAHA's Next Target Trump's Tariffs Make Currency Trading Cool Again After Years of Decline The Game Changer: How Ely Callaway Remade Golf Trump Promised to Run the Economy Hotter. His Shock and Awe May Have a Chilling Effect Orange Juice Makers Are Desperate for a Comeback ©2025 Bloomberg L.P. Sign in to access your portfolio
