ECB’s Schnabel: Climate Change Goals Will Never Interfere with Price Stability Objective

4 March 2021

By David Barwick – FRANKFURT (Econostream) – European Central Bank Executive Board member Isabel Schnabel made clear on Wednesday that climate change would in no way supplant price stability as sole primary objective of the ECB.

In a speech at an online seminar, the text of which the ECB made available, Schnabel said that ‘the precedence of price stability over other objectives implies that if monetary policy needs to be tightened to achieve our price stability objective for reasons unrelated to climate change – for example, because of underlying price pressures – then we must not hesitate to act.’

‘Climate change is, and will remain, only one among many factors shaping the inflation outlook relevant for monetary policy’, she said.

Although the ECB’s policies might undergo a necessary ‘reorientation … in line with the political priorities set by European decision-makers’, the ECB’s commitment to price stability is not called into question, she insisted.

Therefore, in the interest of price stability, the ECB may sometimes cease from buying green bonds, ‘thereby defying the threat of “green dominance”’, she said.

‘Strict adherence to our primary mandate is crucial in order to safeguard the legitimacy of our actions as an independent institution’, she added.