REindustrialisation, decarbonation, aging of the population … Like all European countries, France is today faced with many challenges which can no longer be submitted later. But, faced with these imperatives, France encounters several obstacles.
One of them is the cost of its debt. Since 2021 in fact, interest payments have already increased by 16.8 billion euros and will reach 54.9 billion euros for the year 2025. One of the reasons for this flight is the increase in guiding rates by the European Central Bank (ECB) following the inflationary episode caused by the COVID-19 crisis and then fueled by the war in Ukraine.
For this reason, France should be attentive to the discreet review that the ECB leads to its monetary policy. There is indeed a real risk that this revision would be, once again, modeled on dated methods of combating inflation, based on the increase in interest rates.
The current framework assuming, in fact, that high rates make it possible to anchor inflation anticipations and prevent unions from demanding salary increases. However, this accent put almost exclusively on early inflation should no longer constitute, today, the alpha and the omega of all monetary policy: the evolution of anticipations being only one of the many possible causes of inflation.
Dilemma
To judge, we already have sufficient decline in the recent inflationary episode. This has found its origin in the combination of particularly severe constraints on the offer-which followed the restart of the world economy, putting under bell for the time of the epidemic-and of tariff strategies implemented by many companies.
To try to curb the phenomenon, the ECB, which had properly identified the sources of this price increase, then found itself in front of a dilemma: either considering that the phenomenon would only be ephemeral and do nothing, either use the mass weapon available to it, namely the guiding rates.
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Source: Lemonde