Banque de France (Bank of France) deputy governor, Agnès Bénassy-Quéré, recently spoke about the challenges facing central banks in an interview with Euronews. As the European Central Bank (ECB) is set to announce its latest interest rate decision, Agnès highlighted three key challenges facing the Bank of France: disinflation, innovation, and climate change.
She emphasized the importance of citizens following economic data, explaining that GDP and inflation rates have a direct impact on purchasing power. Each percentage point of GDP is worth €26 billion to France, while each inflation point not offset by rising wages reduces household purchasing power by €16 billion.
Despite global unrest in recent years, Agnès noted that French purchasing power has not decreased. Events such as Taylor Swift’s concerts in Paris and the Olympics have helped boost France’s GDP in 2024, with quarter-on-quarter growth rates expected to increase by 0.25%. However, she cautioned that these are short-term effects and not indicative of long-term economic growth.
Agnès also discussed the challenges posed by climate change, stating that it is a source of shocks to prices and public finances. While governments must take steps to address climate change, she warned of potential inflationary impacts from carbon taxes and the burden of stabilization shifting to central banks.
In conclusion, Agnès highlighted the importance of understanding economic data and the challenges ahead for central banks in navigating the complex issues of disinflation, innovation, and climate change.
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Photo credit www.euronews.com
