Macroeconomic impact of extreme weather events

An analysis of eight major economies in the Americas showed that droughts reduce economic output over the two years after they occur due to lasting effects on agriculture, forestry and electricity production. The report highlighted the trading relationship between weather events and economic impacts, emphasizing that monetary policy may have to react differently depending on price impacts. Overall, droughts and storms were found to raise energy prices over the following three months but showed no persistent impact on inflation.