As climate change drives more frequent and more severe weather events and as governments across the world implement policies to transition their economies to net zero, the macroeconomic impacts are increasingly materialising over time horizons relevant for monetary policymakers. James Talbot, Executive Director at the Bank of England and Chair of the Network for Greening the Financial System’s (NGFS) workstream on monetary policy, explains why monetary policymakers must understand the macroeconomic impacts of climate change. Drawing on the latest work in this area, he discusses the channels through which climate shocks affect the economy, the trade-offs they can present for policymakers and why central banks need to better understand these risks.