Our national difficulties have been starkly amplified by the new US administration’s policy shift. The international order and alliances are being upended; mutually beneficial trade and global growth are under attack. Americans themselves, but also the rest of the world, appear stunned.
However this Letter is a resolute call for France and Europe to shake off their stupefaction. A call for us to raise our game and broaden its scope beyond the quarrels of the day. A call to act, and act further and with greater unity. We have the means to launch this general mobilisation, provided we have the firm will.
Amidst all of this unpredictability, there is nonetheless one certainty: our victory over inflation is almost assured, with price growth falling to well below the 2% mark in France, and close to this target in the euro area. This has already allowed us to make significant cuts to interest rates. It is also supporting the purchasing power of wages. The current threats pose little risk to our inflation rate, but are more of a downside risk to French growth, which has already slowed. However, the Banque de France’s baseline projection remains that of an exit from inflation without a recession, then a gradual acceleration of activity.
