2022 – Latest inflation data provides arguments for normalization

© Reuters. FILE PHOTO: Bank of France Governor Francois Villeroy de Gallo delivers a speech during the annual meeting of CEOs of small and medium-sized businesses at the Banque de France in Paris, France on October 22, 2021. REUTERS/Sarah Messonnier

PARIS (Reuters) – Bank of France Governor Francois Villeroy de Gallo said on Tuesday that the recent rise in the rate of inflation was making exit from exceptional monetary policy measures even more necessary.

Preliminary data coordinated with the European Union showed on Tuesday that French inflation rose more than private economists expected in May to a new record high of 5.8%.

“The latest May inflation figures in France and elsewhere confirm the rise we expect and the need for a gradual but decisive normalization of monetary policy,” Villeroy said in a speech at the French Financial Supervisory Authority, which he also chairs.

Villeroy added that a decision on normalization would be taken at the ECB’s Governing Council next week and that higher interest rates would benefit French banks’ profitability and net margins.

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