Global Central Banks Brace for ‘Greenflation’ and Climate Change

Climate change and the energy transition are becoming top of mind for central bank policymakers as they grapple with volatile energy prices and the effects of more frequent extreme weather events.

The shift to green energy may be “inflationary and even slightly stagflationary,” Bank of France Governor Francois Villeroy de Galhau said Friday, speaking virtually on a panel at a central bank conference in Bangkok. “I stress might, we don’t know yet.”

“Looking through” green transition-induced inflation “would be a seductive monetary policy but it’s probably the risky one,” he said Friday. “So we will have to react, but not ...