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Macro

ECB’s Schnabel says climate change is shaping monetary policy

European Central Bank Executive Board member Isabel Schnabel said Thursday that climate change is increasingly affecting monetary policy, citing evidence that more frequent floods, heatwaves and droughts are reducing agricultural output, disrupting supply and damaging infrastructure. Speaking in Frankfurt, she said these effects feed through into price dynamics.

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AI take

Schnabel's framing matters because it moves climate from a financial-stability or supervisory topic into the core inflation debate, where it can shape how the ECB reads supply shocks. The audience is less crypto than macro: anyone pricing euro-area rate paths now has to weigh whether repeated weather-driven output and infrastructure damage look like transient shocks or a persistent upward drag on prices. Whether other ECB officials echo this supply-side reading — and whether it shows up in staff forecasts rather than speeches — is the open question.

Generated by AI for reference only.

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