“Faced with inflation, there may be a need for additional rate hikes”

The Governor of the Banque de France met Emmanuel Macron on Monday to give him his “Annual Letter to the President”, which draws up an annual report on the economic situation in France.

The 2023 edition gives priority to the fight against inflation.

LE FIGARO.

- Should we worry about the persistence of inflation?

Francois VILLEROY DE GALHAU.

-

Inflation is an economic and social disease;

it is necessary to identify the symptoms in order to find the right treatments.

When it reappeared in Europe, in the fall of 2021, it was first due to imported supply shocks on the cost of energy and agricultural products.

Our “Letter” explains how these phenomena are diminishing: this is already the case for energy and it should be so in the second half of the year for food because world agricultural prices are beginning to fall.

But these shocks have in the meantime spread to the entire economy, and inflation has therefore changed in nature: it is likely to be more persistent…

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