FRANKFURT (Reuters) – The European Central Bank should keep its narrow focus on targeting inflation because a broader interpretation of its mandate, even to include climate change goals, could jeopardize its independence, Bundesbank chief Jens Weidmann said on Thursday.
The ECB last week launched a broad review of its policy strategy and policymakers are expected to refine the bank’s inflation target, review the tools it uses and consider whether to take on additional roles, particularly in fighting climate change.
“A broad interpretation of our monetary policy mandate would ultimately jeopardize independence, and quite rightly in my view,” Weidmann said in speech in the German town of Freiburg. “Independence and a narrow interpretation of the mandate go together.”
Weidmann added that instead of a direct role in combating climate change, the ECB could use its bank supervision arm to push lenders to consider financial risks from climate change and to account for the transition to a greener economy, thereby creating a more sustainable financial system.
The ECB should also consider the economic impact of climate change and climate policy in its monetary policy analysis, Weidmann added.
(Reporting by Balazs Koranyi; Editing by Hugh Lawson)