Climate change increases inflation risks – ECB paper
Both level and volatility of inflation could increase due to rising temperatures, researchers say
Climate change will make monetary policy-makers’ task increasingly hard, research published by the European Central Bank finds.
One effect of climate change it to increase the difficulty in distinguishing between temporary and permanent inflationary shocks, the paper finds.“This makes it even harder to forecast inflation accurately,” write Friderike Kuik, Wolfgang Modery, Christiane Nickel and Miles Parker.
“Moreover, the uneven impact of climate change on countries makes it more challenging to
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