Villeroy predicts maximum inflation in the first half, without risk of recession

By Marine Strauss

PARIS, March 1 (Reuters) – Inflation in France is expected to peak in the first half of the year and, barring a major global event, the risk of recession could be ruled out, said Francois Villeroy de Galhau, one of the leaders of the European Union. . Central bank.

Villeroy, who is also governor of the French central bank, said inflation should return to around 2%, the ECB’s target, between the end of 2024 and the end of 2025.

In an effort to bring record inflation back towards its 2% target, the ECB has raised rates by a total of 300 basis points, to 2.5%, since last July, and promised another rate hike. by 50 basis points in March.

“After the monetary normalization ‘sprint’ that began in July 2022, we are now entering a new phase of monetary policy that is more akin to a race to the distance,” Villeroy said during an appearance before the French parliament’s finance committee. .

“It will be longer – we must not declare victory too quickly – but more progressive and more pragmatic in the pace of the next climbs,” Villeroy told French lawmakers.

While it’s too early to tell when rates will peak, Villeroy said it would be “desirable” for the summer, no later than September.

(Reporting by Marine Strauss; Editing by Raissa Kasolowsky and Sharon Singleton, Spanish editing by José Muñoz in the Gdansk newsroom)