Since 1945, the governor of the Bank of France has sent a letter every year to the President of the Republic on the economic and financial state of the country. After two years of rising interest rates from the European Central Bank (ECB), François Villeroy de Galhau confirmed the clear decline in inflation which fell to 2.4% in March 2024 after a peak in inflation experienced in February 2023.
Towards a rate cut in June
The credit tightening measures made it possible to avoid “between 1 and 2 points of inflation” analyzes the institution. On the growth side, it is a slowdown with only +0.2% in the first quarter but recession has been avoided. “Growth should simmer with the drop in rates that we can expect from the ECB next June” anticipates Christine Bardinet, director of the Banque de France Occitanie. The financial markets are counting on three rate cuts in 2024. The institution does not venture into such predictions but foresees rates of 2% in 2026.
25 years of the €uro
This year, the Banque de France will celebrate the 25th anniversary of the €uro, which was implemented scripturally (on bank accounts) in 1999 while notes and coins only arrived on January 1, 2002. “Since 1999, inflation was halved, going from 4.4% on average to 1.9%,” recalls Christine Bardinet. On the other hand, European GDP has grown much more slowly than American GDP with growth of only 25% between 1999 and 2023 compared to 38% across the Atlantic.
In his letter, the governor also sounds the alarm about the exorbitant level of French public debt. Debt repayment will reach 50 billion this year and 87 billion in 2027, which is much more than the national education budget (63.6 billion in 2024).
