The slowdown in inflation, observed in October in the United States, is “good news for all”, welcomed Tuesday the governor of the Banque de France François Villeroy de Galhau.
The numerous signs that the rise in prices in the United States is decelerating since the peak in June “is good news”, because “the United States has been ahead” of the global trend in inflation, the governor underlined in a speech in Japan, during an event organized by the financial center of Paris.
The policy of the American central bank (Fed) to try to control inflation “has had a strong impact on the rest of the world with the strengthening of the dollar”, he also estimated. The euro spent long weeks below parity with the dollar, and reached levels not seen since 2002.
Consumer prices in the United States rose 7.7% in October compared to October 2021, according to the benchmark CPI index, a weaker increase than the 8.2% increase recorded in September, and less higher than expected.
Enough to make investors jubilant, with a sharp rise in shares after this publication.
The Fed should soon slow the pace at which it raises its key rate, the main tool to fight against inflation, said Monday its vice president Lael Brainard, stressing however that the institution must not stop these increases yet.
It is in the range of 3.75% to 4.00%, its highest level since January 2008.
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For the European Central Bank (ECB) too, sharp increases in its rates “should not become a habit”, declared the Governor of the Banque de France, who thinks that they should go up again “but in a more flexible and perhaps slower”, after its last meeting of 2022, scheduled for December.
Eurozone price inflation hit a record 10.7% in October, and it will take ‘clear signs of a turnaround in core inflation’, which rules out more volatile food prices and commodities, to halt rate hikes.
The ECB’s benchmark rate is currently at 1.50%, whereas it was negative before the summer.