"There are two options: one is the French government, which believes that the price rise will not last long, and can therefore give money to support consumption. The other is the position of central bankers, who believe that inflation must be stopped at all costs," summarized Jean-Herve Lorenzi, president of the Economic Meetings of Aix–en-Provence.
"The speed at which change is occurring, i.e. Christian de Boissieu, an economist, said that he was surprised by the speed of change. France's INSEE (National Institute of Statistics), predicts a 6.5% to 7% increase in consumer price indexes, a feat that has been unheard of in nearly 40 years.
Pierre-Olivier Gourinchas, chief economist at the International Monetary Fund, stated that the US Federal Reserve, Bank of England, and the ECB (European Central Bank), are all in play to increase interest rates, slow down growth, and reduce fiscal space.
Although the European Central Bank had been fighting for a decade against an increase in prices that was too high compared to its target level of around 2% for 10 years, it still believed last year that inflation would soon return to that level. The ECB published its June projections and expects a slowdown to 3.5% next year, followed by a landing of around 2% in 2024. This is despite a 6.8% price rise in the euro area.
However, the need to implement the energy transition quickly to reduce our dependence upon fossil fuels and accelerate by the desire not to allow Russian gas or oil imports to continue could support the price rise for longer.
The relocation of European value chains that are essential to our sovereignty could fuel inflation. In the future, a carbon tax would be introduced at EU borders to imports to fight global warming. climatic.
Patrick Artus, an economist, predicted in June that the monetary cycles that had been lost in 2010s would return in a column in Le Monde. These cycles saw central banks provoking recessions to stop inflation. This was similar to what happened in 1980-82, 1990, 2000, and 2008.
We must end inflation, because it is "the most progressive tax there is" that "trims wages of the poorest and prevents investment for future generations. It disrupts all growth mechanisms and all distributive mechanisms," Aix Luis pereira da Silva, deputy general director of the Bank for International Settlements (based in Basel, Switzerland), explained.
