ECB Focuses on Inflation, Not Bond Spreads, Nagel Says
Investors are demanding higher returns as France’s borrowing costs climb on fiscal and political worries, while the ECB says its bond tools are not for targeting spreads.
- On Friday, the French 10-year bond yield surged to just under 5%, its highest level since 2002, while the spread over German Bunds widened to 132.86 basis points as investors sold French government debt.
- France unveiled its 2027 budget bill last Thursday, projecting national debt will reach a record 119% of GDP this year, intensifying market scrutiny over the country's borrowing sustainability.
- European Central Bank policymaker Joachim Nagel stated Thursday that the bank's debt-buying tools are designed for price stability rather than targeting sovereign bond spreads, noting, "You mentioned one, but we have several other tools."
- Top economist Mohamed El-Erian wrote Monday that "contagion risk is back in Europe," citing real-time evidence of interest rate risk spilling into credit markets, while the euro fell to 1.12 dollars on Monday.
- Strategists at Barclays wrote last week that "France stands out as spreads have moved to crisis level," as political uncertainty and inflation concerns continue fueling market anxiety across the eurozone.
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While the 10-year borrowing rate has reached an unprecedented level since 2002, Emmanuel Moulin calls for "recovery of public finances".
As the 2027 budget arrives at the National Assembly, the governor of the Banque de France warns about the cost of the debt which could rise by 12 billion euros next year France risks
As France’s debt crisis intensifies, the central banker argues that the country must clean up its public finances. And he calls on Parliament to vote on the Le Corneille government’s budget. The post France: Central Bank Calls on Parliament to Approve Budget – Otherwise, It Sees Economic Collapse appeared first on in.gr.
If France does not adopt a budget plan capable of reducing spending and the deficit, it risks being 'progressively strangled by the rise in interest rates'. IT IS...
France is facing one of the most dangerous economic and social combinations in recent decades: rising debt, huge budget deficit, violent protests and political blockade before the presidential elections of 2027. According to an analysis published by Axios, this cumulation of factors fuels fears that the second euro area economy could become the source of a new sovereign debt crisis, with effects on Europe as a whole, especially on countries alre…
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