tiff macklem : panel remarks remarks ( delivered virtually ) by mr tiff macklem, governor of the bank of canada, at the public policy forum, ottawa, ontario, 17 november 2020. * * * i am very pleased to be here today, and i want to commend the public policy forum for organizing this event. chairing the expert panel on sustainable finance was a rewarding experience. it was a privilege to work with the other panel members — barbara zvan, andy chisholm and kim thomassin. together we met with hundreds of business leaders, financial experts and organizations across canada. i ’ ve taken a new job since the panel submitted its final report, and with it comes new responsibilities. and even though the phrase climate change doesn ’ t appear in the bank of canada act, the central bank has a clear interest in this issue. the act instructs the bank “ to promote the economic and financial welfare of canada. ” to carry this out, we need to understand the major forces on our economy. climate change and the transition to low - carbon growth will have profound impacts on virtually every sector of the economy in the decades ahead. so, to fulfill our monetary policy remit, we need to understand the implications of climate change for economic growth and inflation. this is no different than our need to understand other major forces on the economy like technological change, an aging population and the ever - shifting dimensions of globalization. the effects of climate change are also important for the bank ’ s responsibilities regarding the financial system. it ’ s our job to promote an efficient and stable financial system. this is where our connection to sustainable finance is most obvious. a well - functioning — and efficient — financial system has the important job of channelling savings to the most productive investments. finance is not going to solve climate change, but many of the investments and innovations that will are very capital - intensive. that ’ s why it ’ s so important for the financial system to steer capital to the most - promising sustainable investments. the financial system also plays a critical role in helping households and businesses manage new climate risks. this includes both the physical risks associated with more extreme and more frequent weather events and the transition risks related to the revaluation of assets and the reassessment of projected earnings. a stable financial system is one that is itself resilient to these physical and transition risks. as the expert panel highlighted in its final report, transition risks are often mispriced

as before, dwindle during the spring. this presupposes, however, that the price rise does not spread to other items or lead to wage increases. another argument for a future easing of inflationary pressure is the existence of unutilised resources as a result of the slowdown. however, in my opinion, the riksbank must watch developments closely to ensure that the recent rise in the inflation rate actually falls and does not stick. most indicators appear to imply that inflation will be close to the target level of 2 per cent, or at least within a small margin on one side or the other. this evening i have tried to present a general account of my preliminary view of some aspects of assessments of the future path of inflation. i look forward to the continued discussion of these matters with my riksbank colleagues. our decision about interest rate policy is due at the meeting next tuesday, 4 december. the result of our discussions will be published the following day, 5 december, as will the fourth inflation report of 2001.