Climate Change and Central Banks: Speech by incoming RBA Governor, Michele Bullock

The Reserve Bank of Australia’s incoming Governor, Michele Bullock, warned of ‘particularly acute’ uncertainty over how climate change will affect the economy, suggesting that it could make the setting of monetary policy more challenging.

‘Navigating uncertainty is an inherent part of the work of a central bank,’ in a speech Bullock told an audience at the Australian National University on 29 August 2023.

The incoming Governor noted that the challenges economic and financial challenges arising from climate change are typically divided into two categories:

1. Physical risks – including both the impact of more frequent and extreme weather events such as fires, floods, droughts and cyclones, as well as gradually emerging effects on temperature, rainfall and sea level.
2. Transition risks – arising from the actions taken in response to climate change. These can include policy actions, technological innovation or people’s preferences, here and overseas.