Bank of France Governor Says ECB Policy Decisions Taken Meeting by Meeting — Update

By James Glynn

The Bank of France's governor said rate-setting policy decisions by the European Central Bank are being made one meeting at a time, focusing primarily on incoming data.

"We are making decisions meeting by meeting and we are data dependent and so I won't comment on what the focus of the market is," said Emmanuel Moulin, who sits on the governing council of the ECB, at the annual meetings of the International Monetary Fund and World Bank Group in Bangkok.

"We are looking at the data and we are looking at the market," he added.

A selloff in French government bonds accelerated this month, sending long-term borrowing costs toward their highest levels in decades.

Investors are concerned that political paralysis is making it impossible for the country to rein in public spending.

Calls have been made to force spending cuts through parliament, but that hasn't quelled fears that the country is heading for a debt spiral.

Moulin was somewhat upbeat on the prospect that the French government would be able to achieve a significant fiscal consolidation over coming years.

"One should consider that France has been able to reduce its deficits quite significantly before," Moulin said.

A recent sharp rise in government bond yields is acting as a brake on the economy, Moulin noted.

"Financial conditions have been tightening thanks to interest rates increasing at the long end of the curve," he said.

While rising sovereign bond yields are driving up debt servicing costs, "it is totally possible to have this kind of adjustment without waiting too much on growth," he said.

"It needs to [be] consistent, and I think it is achievable," he added.

Directionally, the government is moving in the right direction and the political consensus is positive, Moulin said.

At a separate briefing on Wednesday, IMF Managing Director Kristalina Georgieva said it will take time for France to get deficit and debt down to levels that provide confidence.

"I remain positive in the expectation that France will have a budget that sets this direction of a downward trend," said Georgieva.

She also expressed hope that other economies dealing with high debt and widening deficits will receive the message the IMF has been repeating through the week: "Fundamentals matter. Get your [fiscal] house in order or your people, your businesses will pay the price," she said.

--Fabiana Negrin Ochoa contributed to this report

Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

October 14, 2026 04:27 ET (08:27 GMT)