Climate Challenges: Central Banks In The Hot Seat – Rethinking Monetary Policy and Educational Activity

Global warming poses many challenges for all economic entities. The two main challenges facing all countries are climate change mitigation and adaptation. Central banks also face difficult tasks in this context. The difficulty stems from the impact of climate change on all sectors of the economy. Central banking has to deal with the new challenges created by climate change for monetary policy, macroprudential policy, but also climate education. The aim of the article is to verify to what extent climate change is considered in the central bank’s main objective – monetary policy. Therefore, the article examines the frequency with which central banks refer to climate issues in their inflation reports. Applying a text mining approach to the analysis of 459 inflation reports published by 10 central banks from post-communist countries between 2013 and 2023 confirms that climate issues make up a small part of inflation reports. On the positive side, the frequency of central banks’ references to climate issues increased after 2022 (in particular, the frequency of words in the area of transition risks). The study also found that the challenges of climate change are motivating central banks to take various actions to spread climate education in society. The trends identified point to an urgent need for central banks to pay more attention to climate risks in their activity – monetary policies, prudential policies and climate education.