United States' Monetary Policy and Climate Action: How the US Federal Reserve Supports Renewable Energy

ABSTRACT: In our world where climate change is gradually disrupting economic stability and threatening global financial systems. Growing scrutiny has been placed on the responsibility of central banks, especially the United States Federal Reserve (Fed), to address environmental risks. The Fed is essential in determining the nation’s monetary policy, but its direct engagement in climate initiatives and support for renewable energy is somewhat restricted. Nonetheless, the Fed has become more aware of the financial threats associated with climate change and has started to incorporate climate-related factors into its overall policy framework. This research article tries to find how the Fed is integrating climate action into its monetary policy outline and its efforts including risk assessment and sustainable green finance. Moreover, this paper examines Fed action to measure and mitigate climate-related risks, including testing financial institutions for climate resilience and encouraging the transition to a low-carbon economy through the adoption and integration of sustainable financial practices. Furthermore, this paper investigates into how the Fed can stimulate green investments, promote climate-related financial disclosures, and maintain long-term economic stability in terms of environmental challenges. This can be done due to examining recent policy actions and directions in United States. While emphasizes that the Federal Reserve's integration of climate into its mandate demonstrates a deeper transformation toward alignment of monetary policy with global sustainability aims.