Bank of France Governor François Villeroy de Galhau forecast that inflation will rise above 3% in 2026 during a Monday interview.
These projections signal a challenging period for the Eurozone's second-largest economy as it grapples with an unprecedented energy-price shock and geopolitical instability. The governor's outlook provides a critical roadmap for the European Central Bank's upcoming interest rate decisions.
Speaking on BFMTV’s Face-à-Face programme, Villeroy de Galhau said that inflation could exceed 3% [2] on an annual basis this year. Despite this surge, he expects inflation to return to the target of 2% [1] by 2027-2028.
Regarding economic growth, the governor said that France will avoid a recession through 2028 [5]. He provided a range of growth possibilities for the current period, noting that growth could reach +0.9% [3] in the most favorable scenario or +0.3% [4] in the least favorable case.
"We expect inflation to be back at 2% by 2027-2028," Villeroy de Galhau said.
The governor linked the current economic volatility to a combination of energy costs and global uncertainties. He said that the European Central Bank must remain vigilant to prevent price increases from becoming entrenched across the wider economy.
"The ECB must be both cautious and ready to act on interest rates should inflation spread beyond a surge in oil prices," Villeroy de Galhau said.
The governor's assessment suggests that while the short-term outlook involves higher costs for consumers, the structural integrity of the French economy remains sufficient to prevent a contraction, a key priority for the national government.
“We expect inflation to be back at 2% by 2027-2028.”
The forecast indicates a 'peak and plateau' scenario where an immediate spike in energy costs drives inflation higher in 2026, but does not trigger a broader economic collapse. By predicting a return to 2% by 2027-2028, the Bank of France is signaling that current inflationary pressures are transitory rather than structural, though the narrow growth window of 0.3% to 0.9% leaves little room for further external shocks.
