Key insights
- Bank of France Governor Villeroy expects French inflation to return to 2% in 2027-2028 after a surge in 2026. While France is expected to avoid recession this year, the delayed return to the inflation target suggests prolonged restrictive monetary policy in Europe, potentially weighing on global growth and indirectly impacting US equities.
PARIS, May 4 (Reuters) - Bank of France Governor Francois Villeroy de Galhau said on Monday he expected the inflation rate to return to 2% in 2027-2028 after a spike this year triggered by higher energy prices caused by "an unprecendent shock".
"We will first have a surge in inflation in 2026 this year, so inflation according to the scenarios would be between a little less than 2% on average annually or more than 3%," he said in an interview on BFM TV station. "But inflation would return to the target of 2%."
He added the bank expected France to avoid recession this year, with economic growth of between 0.3% and 0.9% "in the most optimistic scenario".