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France's Central Bank Confident of 'Soft Landing' Amid Global Economic Challenges

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Mahnoor Jehangir
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France's Central Bank Confident of 'Soft Landing' Amid Global Economic Challenges

In a recent interview with Radio-Classique, Agnes Benassy-Quere, the deputy governor of France's central bank, affirmed that despite the current economic sluggishness, France is not on the brink of a recession. The central bank remains confident in a 'soft landing' scenario for both the global and European economies. This statement comes amidst global economic challenges, from labor disputes at Tesla in the Nordic region to potential job cuts by electric vehicle maker Nio, and economic distress signaled by China's weak trade data.

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ECB's Rate Forecasts in the Spotlight

The European Central Bank's (ECB) forecasts and accompanying messages are gaining importance as President Christine Lagarde assesses the extent to which she can counter market bets on interest rate cuts. With weakening inflation and a feeble economy, traders are piling up bets on a reduction as early as March. Bjoern Griesbach, senior investment strategist at Allianz, believes that the projections will play a vital role in determining the course of action.

(Read Also: Fraud Involving Payment Methods in France: A 1.19 Billion Euro Loss and the Dispute Over Reimbursements)

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Bank of England Holds Steady

Meanwhile, the Bank of England plans to maintain the Bank Rate at 5.25% on December 14 and through the second quarter of 2024. This decision comes after British inflation cooled more than expected to 4.6% in October from 6.7% in September. Despite this, most economists forecast only a 25 basis point cut in the third quarter.

(Read Also: French Government’s Decision to Not Hike Pesticide and Irrigation Taxes Criticized)

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Bank of Canada Expected to Hold Rates

On the other side of the Atlantic, the Bank of Canada (BoC) is expected to maintain rates at a 22-year high of 5% following a contraction in growth in the third quarter. Despite avoiding a recession, Canada's economy contracted at an annualized rate of 1.1% in the third quarter. Analysts predict that upcoming mortgage renewals at higher rates could further impact growth next year.

US Job Creation Eases

In the United States, hiring in the private sector slowed down in November, according to payroll firm ADP. This slowdown is likely to be viewed favorably by policymakers at the US Federal Reserve, who aim to cool the economy and cut inflation while avoiding a damaging recession. The private sector added 103,000 jobs in November, falling short of the market expectation of 127,000 new jobs.

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