ECB's Villeroy sees inflation peak in first half of year, no risk of recession
Reuters
Published Mar 01, 2023 04:51AM ET
Updated Mar 01, 2023 08:46AM ET
By Marine Strauss
Paris (Reuters) -Inflation in France is likely to reach its peak in the first half of the year and, barring a major world event, the risk of recession could be ruled out, French European Central Bank policymaker Francois Villeroy de Galhau said on Wednesday.
Villeroy, who is also governor of the French central bank, said inflation should be back to around 2%, the ECB's target, by the end of 2024 to the end of 2025.
In an effort to steer record inflation towards its 2% target, the ECB has hiked rates by a combined 300 basis points to 2.5% since last July and promised to deliver a further 50 basis-point increase in March.
"After the "sprint" of monetary normalisation that began in July 2022, we are now entering a new phase of monetary policy that is more comparable to a long-distance race," Villeroy told a hearing of the French parliament's finance committee.
"It will be longer - we must not claim victory too quickly - but more gradual and more pragmatic in the pace of the next hikes," Villeroy told French lawmakers.
While it is too early to tell when rates would reach their peak, Villeroy said it would be "desirable" by summer, at the latest by September.
The Bank of France will slightly raise its growth forecast for the French economy for 2023 on March 20, from an increase of 0.3% forecast in December, before recovering in 2024.
France's public debt ratio is 20 percentage points higher than that of the euro area as a whole - 113% of GDP against 93% in Q3 2022 - and, unlike in major countries of the euro area, is not decreasing.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.