The governor of the Bank of France, François Villeroy de Galhau, stated Thursday that the current conflict in the Middle East does not pose a risk to global financial stability. “Financial stability is not at risk, I can say that very clearly, We see one of the things we grasp,” Villeroy de Galhau affirmed during a radio interview on France Inter.
Whereas acknowledging the potential for economic impact, Villeroy de Galhau suggested the war could “lead to a little more inflation and a little less growth” in France, with the extent of the impact dependent on the duration of the conflict. He explicitly stated, yet, that “we will not have a recession.”
The governor drew a comparison to the 2022 energy shock following Russia’s invasion of Ukraine, emphasizing that the current economic context is distinct. “2026 is not 2022,” he said, noting that the previous inflationary wave occurred in the wake of the COVID-19 pandemic and impacted a broader range of commodities.
Villeroy de Galhau indicated that, at present, there is no impetus for the European Central Bank (ECB) to raise interest rates in response to inflationary pressures stemming from the Middle East situation. “I do not see today any reason why we at the ECB should raise our interest rates [to temper inflation]. We will see meeting after meeting,” he stated, while too characterizing the overall situation as “serious.”
The comments arrive as concerns linger regarding potential disruptions to energy supplies and broader geopolitical instability. According to Roland Lescure, France’s Minister Delegate for Industry, there are “uncertainties” regarding gas and gasoline supplies, but no short-term supply issues are anticipated in France.
Separately, Gérald Darmanin, France’s Minister of the Interior, has stated his intention to visit former President Nicolas Sarkozy in prison following Sarkozy’s recent conviction on corruption charges. Darmanin stated, “I will go to see him in prison.”
Meanwhile, France’s Livret A savings account interest rate has been lowered to 2.4% as of February 1st, as confirmed by the Ministry of the Economy and Finance.
In a related development, Villeroy de Galhau recently asserted that being European is currently more advantageous than being American, and cautioned against the “dangerous” wave of deregulation occurring in the United States.
