(Adds details on forecast, debt ratio and background on
inflation, terminal rates)
By Marine Strauss
Paris, March 1 (Reuters) - Inflation in France is likely
to reach its peak in the first half of the year and, barring a
major world event, the risk of recession could be ruled out,
French European Central Bank policymaker Francois Villeroy de
Galhau said on Wednesday.
Villeroy, who is also governor of the French central bank,
said inflation should be back to around 2%, the ECB's target, by
the end of 2024 to the end of 2025.
In an effort to steer record inflation towards its 2%
target, the ECB has hiked rates by a combined 300 basis points
to 2.5% since last July and promised to deliver a further 50
basis-point increase in March.
"After the "sprint" of monetary normalisation that began in
July 2022, we are now entering a new phase of monetary policy
that is more comparable to a long-distance race," Villeroy told
a hearing of the French parliament's finance committee.
"It will be longer - we must not claim victory too quickly -
but more gradual and more pragmatic in the pace of the next
hikes," Villeroy told French lawmakers.
While it is too early to tell when rates would reach their
peak, Villeroy said it would be "desirable" by summer, at the
latest by September.
The Bank of France will slightly raise its growth forecast
for the French economy for 2023 on March 20, from an increase of
0.3% forecast in December, before recovering in 2024.
France's public debt ratio is 20 percentage points higher
than that of the euro area as a whole - 113% of GDP against 93%
in Q3 2022 - and, unlike in major countries of the euro area, is
not decreasing.
(Reporting by Marine Strauss
Editing by Raissa Kasolowsky and Sharon Singleton)
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