Hélène Rey presented the current state of work on the effect of carbon pricing on central banking and macroeconomic indicators, such as output, inflation and measures of inequality. Rey warned of a possible conflict between carbon pricing (and its inflationary effect for energy prices) and central banks’ price stability mandate: the transitory increase in energy prices should not necessarily lead to inflation targeting measures, which also bring down price levels in other goods markets. The London Business School Professor suggested that independent carbon councils, modelled after central banks, should receive the public mandate to ensure net zero emissions in 2050. They would establish a credible, gradual and predictable development of the carbon price to smooth over the transition to net zero.
"Mainstreaming the Transition to a Net Zero Economy"
"Transition to Net Zero and Macroeconomics" (Slides)