Ahead of Trump Presidency, the Fed Quits Global Climate Network
Published On Jan 17, 2025, 3:34 PM
The Federal Reserve announced its withdrawal from a global network focused on climate change risks, which it joined in December 2020. The decision comes shortly before Donald J. Trump's inauguration, as the Fed cited the network's expanded focus on issues outside its statutory mandate. While Democrats had previously supported the Fed's involvement, Republican lawmakers criticized it for overstepping its congressional duties. The withdrawal was not unanimous, with five governors supporting the exit and two abstaining, amid concerns about the Fed influencing lending practices towards fossil fuels.
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The Federal Reserve's withdrawal from the climate network can be seen as a return to a more traditional focus on its core mandates of managing inflation and employment. This may signal to investors that the Fed intends to avoid engaging in politically charged climate initiatives that could affect financial markets, especially those tied to fossil fuels. This decision may lead to stabilization in these sectors, as it lessens regulatory pressure and uncertainty for oil, gas, and coal companies.
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