By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Emmanuel Moulin said on Tuesday that rising inflation expectations were one of the factors behind the recent global bond market selloff, making it essential for central banks to maintain their credibility.
Speaking at a press conference, Moulin, who heads the Banque de France, said the increase in bond yields was a global phenomenon, driven in part by greater debt issuance as well as by higher inflation expectations.
Among the factors increasing bond supply, he pointed to US technology companies raising financing to fund investment in artificial intelligence.
A second factor behind the rise in yields was higher inflation expectations, Moulin said, noting that this made central bank credibility particularly important.
“The forecasts of the ECB show that inflation is above our target, and so that justified the decisions we have taken,” he said.
Moulin also played down concerns about France’s ability to finance itself amid the rise in global bond yields, pointing to strong investor demand for French government debt.
“French debt is very attractive, and investors are buying our securities and demanding more than we are offering, so there are no concerns about the financing of the state,” he said.
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