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Climate risks still on the fringe of monetary policy in Asia

Notwithstanding efforts by the PBoC and BoJ, there is still a need to observe persistent and measurable impacts on inflation and output before climate change truly influences interest rate policy, argues Sayuri Shirai

Flooded house in the Philippines

Climate change is reshaping the global economy through rising temperatures, extreme weather and frequent natural disasters that disrupt production, drive up food prices and damage assets. Yet, most central banks still treat these shocks as temporary external factors, leaving climate risks largely outside their core monetary policy frameworks.

This cautious stance in the central bank community reflects multiple challenges. Empirical evidence on the long‑term, persistent impact of climate change on

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