ECB's Lagarde says solution to French debt woes is at home
Lagarde said France must rely on domestic fiscal policy as bond yields climb and investors question the government’s deficit plan.
- On Wednesday, European Central Bank President Christine Lagarde said France must resolve its debt crisis through domestic fiscal policy, effectively downplaying speculation that the ECB would intervene in the bond market.
- France faces escalating financial pressure as public debt has reached nearly 120% of GDP and benchmark 10-year bond yields surged to nearly 5%, the highest level in more than two decades.
- Analysts have speculated for weeks whether the ECB might activate the Transmission Protection Instrument, a crisis tool deployed only if market pressure is deemed "unwarranted," "disorderly," and threatening the central bank's transmission mechanism.
- Lagarde noted the International Monetary Fund expects a 1.1% increase in GDP this year, describing it as "not brilliant" but "not a bad outcome," while flagging continued German government spending support.
- Investors worry that a presidential election next year may hamper deficit reduction, as rising bond yields across the United States, Germany, and Japan reflect global pressures from government debt and energy shocks caused by the Iran war.
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47 Articles
The President of the ECB argues that the way to Paris must go through budgetary consolidation, effectively removing speculation that the central bank can intervene to stabilize the recent shot at French sovereign interest.
The ECB head stressed that Paris is the one who must reassure investors by demonstrating fiscal seriousness.
"As far as France is concerned, the solution lies first and foremost in France, at the level of fiscal policy," warned Christine Lagarde, thus downplaying the possibility of ECB intervention in the bond market. The post Lagarde: The solution lies within France, she says about debt appeared first on in.gr.
The President of the ECB considers that if the fever on the bond market does not only affect Paris, the French case is special and must be settled by adopting a balanced 2027 budget.
The warnings of Fitch, Scope, S&P, Moody's about keeping accounts are growing. In 2027 340 billion have to be refinanced, a thousand by 2030. Lagarde says that the ECB will not help, the IMF expects long time to restore the confidence of the markets. But politics does not offer solutions: The Pen prepares "the confrontation" with the EU, Melenchon goes further: "If I crash with the car against the wall, the GDP increases"
On the debt market, France suffers particularly from questions about its economic and political stability: its 10-year borrowing rate approaches 5%.
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