Should Central Banks Have a Green Mandate?

The UK government is abdicating its responsibility for ensuring a healthy, sustainable economy.

In his March budget, the United Kingdom’s chancellor of the exchequer, Rishi Sunak, enlarged the mandate of the Bank of England to include supporting the government’s target of achieving net-zero greenhouse-gas emissions by 2050. But in a June 8 letter to the Financial Times, Mervyn King, a former BOE governor, was sharply critical of the move. King warned that “an expansion of central bank mandates into political areas such as climate change […] threaten[s] to weaken de facto central bank independence, leading to a slow response to signs of higher inflation.” So, what is going on?