François Villeroy de Galhau, Governor of the Banque de France and President of the Bank for International Settlements (BIS), is the 7.50 am guest.
Banque de France Governor François Villeroy de Galhau estimates on Wednesday that the French economy should grow at a moderate pace of 0.2% in the second quarter, supported by the recovery in services, when industry and construction suffer more. rising raw material costs. “It’s not brilliant, but after a shock like the war in Ukraine, it’s resilient” assures the President of the Bank for International Settlements (BIS).
“We knew since February that the shock of the war in Ukraine was negative for France, that it meant less growth, and more uncertainty” specifies François Villeroy de Galhau who adds that this Wednesday morning, “we can see that these uncertainties are beginning to diminish. Activity and employment are holding up, but inflation is rising sharply”.
The number 1 concern of entrepreneurs: inflation
At this stage, the war in Ukraine and the disruption of production chains linked to health restrictions in China are affecting the prices paid by companies more than their activity, estimates the French central bank in its monthly business survey. "There are big differences between the sectors" specifies the Governor of the Banque de France, "moreover exactly the opposite of Covid-19". "Tourists are coming back, and aeronautics, which suffered a lot two years ago, is recovering rather well" when on the other hand "the automotive, chemical or food industry sectors are suffering a lot from supply difficulties".
The number one concern of entrepreneurs and the French today is inflation, says François Villeroy de Galhau. “There are major supply difficulties in industry and construction, this is unprecedented”, he laments. More than half of these companies therefore increased their prices in April, which is "very rare". The French feel it in their purchases, not just at the pump.
This high inflation is expected to continue this year and start to decline early next year, depending on energy prices. It should return to 2% in 2024, within the next two years
"It's not just our forecast, it's our commitment with Christine Lagarde and the European Central Bank" said the governor of the Banque de France. "In the coming period, that means that money will be a little less easy, that interest rates will gradually rise. But I want to say it with great force, the European Central Bank and the Banque de France will what it takes to bring inflation back to around 2% in the next two years". The Central Bank of France will therefore raise "gradually" its interest rates.