ECB’s Villeroy: High Inflation Reflects Strong Recovery; To Be Temporary
21 October 2021
By David Barwick – FRANKFURT (Econostream) – Currently elevated inflation reflects the strength of the economic recovery and is a temporary phenomenon, European Central Bank Governing Council member François Villeroy de Galhau said Thursday.
In an interview with French daily Sud Ouest, Villeroy, who heads Banque de France, said, ‘The inflationary surge resulting from supply tensions is first of all a consequence of the good news: the strength of the economic recovery.’
Economic recovery has always brought ‘such surges’, he said. ‘It is stronger today precisely because the recovery is stronger.’ In any event, he said, ‘these difficulties are significant, but temporary.’
French inflation of currently between +2.2% and +2.7% would subside to below 2% by the end of next year, he said.
Despite the current surge, average household purchasing power this year should at a minimum be preserved, he said.
Villeroy reconfirmed the French central bank’s domestic growth forecasts of 6.3% this year and 3.7% next year and said the French economy had nearly returned to pre-pandemic activity levels.
The dominant concern was less supply constraints than recruitment difficulties, he said. These ‘could be more durable: more than 50% of the entrepreneurs have difficulty recruiting, which is absurd when the unemployment rate is still at 8%’, he said.