Global temperatures are rising and, in the absence of further mitigating actions, are likely to reach highs over the next few years. The frequency and severity of extreme weather events resulting from rising temperatures has increased markedly. Annual global damages from weather-related hazards have more than doubled in real terms in the past twenty years, reaching 275 billion USD in 20221. Central banks, therefore, need to assess and understand the economic impact of climate change. In the 2022 NGFS survey, central banks expressed a desire to deepen their understanding of these effects. This report presents the channels through which the physical impacts of climate change may affect the economy. It provides monetary policymakers with a framework to evaluate the implications for key macroeconomic variables that are relevant for their decision-making. […]