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Rising interest rates: the Banque de France sounds the alarm

2022-05-10T16:40:21.392Z


DECRYPTION – According to the institution, a 1% increase in interest rates costs, in the long term, 40 billion per year to the budget.


The Governor of the Banque de France, François Villeroy de Galhau, did not hesitate, on Tuesday evening, to raise the subjects that annoy.

Invited to speak before the High Council of Public Finances, an independent body responsible for ensuring the consistency of the government's macroeconomic forecasts, he insisted on the need for the future executive to adapt the country's expenditure package in order to prepare potentially very costly interest rate hikes.

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Investors are already anticipating this rise.

On the secondary debt markets, ten-year French sovereign bonds are trading at around 1.6%, whereas they were at 0% at the start of the year, thus increasing the price at which the State French gets into debt.

A heavy budget burden

Observers are counting on a decision by the European Central Bank (ECB) to raise its key rates in order to fight against inflation, starting this summer, in the wake of the Federal Reserve.

A deadline clearly assumed by François…

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Source: lefigaro

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