Inflation: “We Have the Beginnings of Good News”, says the Governor of the Banque de France

The beginnings of good news on inflation in France

This Tuesday 11th July 2023, the Governor of the Banque de France spoke about inflation in France, announcing that the institution has “the beginnings of good news. On the increase in the future rate of the livret A, which should be announced Thursday 13th July 2023, François Villeroy de Galhau remained cautious.

Bruno Le Maire, Minister of the Economy, and the Banque de France should announce Thursday 13th July the new rate of the Livret A, currently at 3%. Its governor, François Villeroy de Galhau, was the guest of Franceinfo this Tuesday 11th July. Asked about a potential increase to 4%, he remained cautious. He also raised the issue of inflation.

A final proposal on Thursday

“I will make my proposal to Bruno Le Maire on Thursday because we will have the final inflation figure for the month of June”, he explained, also recalling that he will also propose a rate for the popular savings account.

The rate, now at 3%, is likely to rise, but is unlikely to rise to 4%, some experts say. When the question is put to him, François Villeroy de Galhau does not answer directly but recalls that there is always a margin of appreciation and that it is necessary to take into account the two aspects of the savings account Livret A: preserving the interest of savers and on the other hand, the housing sector, because the livret A allows in particular to finance social housing and mortgages. The Governor of the Banque de France recommends to be cautious. 

Inflation is down, but…

 On the interest side of savers, I note that inflation has fallen since the previous fixing of the rate, that it has fallen to 4.5%  , noted François Villeroy de Galhau.

He also mentioned underlying inflation, which is outside of energy and food and which represents 70% of our consumption: “This inflation is a little lower, around 4%, but there is a risk that it will last longer. This is treated with monetary policy and the raising of interest rates and should return to around 2% by 2025. The Governor of the Banque de France insists: This is a commitment that I am making this morning. 

Inflation should be down to 2.5 on average by 2024.  The disease must not take hold, and the remedy – and this is the responsibility of the ECB and the Banque de France – is interest rates. 

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