PARIS, March 11 (Reuters) – Inflation in France is expected to remain low, even though the war in Iran may lead to slightly higher prices and lower growth globally, Bank of France governor Francois Villeroy de Galhau said on Wednesday.
“The meaning of this crisis is unfortunately becoming clearer with each passing day. Economically, it means a little more inflation and a little less growth,” Villeroy said in an interview with French radio station RTL.
“Inflation in France will remain low. I sometimes read the word stagflation… This is not stagflation, because this is not a stagnation of economic activity. We are going to maintain growth,” he added.
France has consistently kept consumer prices among the lowest in the euro zone and below the European Central Bank’s target of 2%.
“Our inflation forecast, which stood at 1.3% for the full year back in December – already very low and which is significantly lower than in our European neighbours – could edge up slightly. I want to stress the word slightly,” Villeroy added.
The Bank of France chief, who also sits on the ECB governing council and who will leave his post in June, echoed comments made by other European central bankers proposing a wait-and-see approach amid the crisis in Iran.
“I do not believe, as things stand today, that interest rates need to be raised right now… But we will not allow inflation to take hold.”
(Reporting by Gianluca Lo Nostro; Editing by Makini Brice)
