Europe Faces an Inflation-Regime Reckoning Over Climate Goals
- Carbon transition may stoke prices, creating policy dilemma
- Raising rates could raise cost of investing in green shift
This article is for subscribers only.
European central bankers’ price stability mission is on a collision course with the goal of combating climate change, unless they change their ways.
The transition to a lower-carbon economy may fuel inflation — but raising interest rates in response to that could hinder investment in cleaner energy. So monetary policy and efforts to save the planet risk working against each other, casting a shadow over the prevailing consumer-price-targeting philosophy of the past three decades.