ECB’s Wunsch: Impact of Climate Transition on Inflation and r* Uncertain

9 October 2024

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Pierre Wunsch said on Wednesday that the impact of climate transition on r* and inflation was ‘uncertain’.

Speaking at an event on climate and financial policies organised by Peterson Institute for International Economics, Wunsch, who heads the National Bank of Belgium, reminded that climate transition would have a cost.

‘I don’t think its going to be a walk in the park, but it’s doable from a macro perspective’, he said.

Wunsch estimated that the cost of climate transition for Belgium would be a 10bp reduction annually in economic growth for 25 years.

That naturally ‘doesn’t mean it’s easy from a political perspective’, according to Wunsch.