Bank of France to Raise 2026 Inflation Forecast, Moulin Says

Bank of France Governor Emmanuel Moulin said the central bank will raise its 2026 inflation forecast, citing the impact of the Iran war on energy prices and supply chains. The revision reflects higher-than-expected consumer price gains, which could influence the European Central Bank's policy stance.

For interest rate traders, this revision is significant because it suggests that inflationary pressures in the eurozone may persist longer than previously anticipated. Higher inflation forecasts typically reduce the likelihood of rate cuts and could even prompt discussions about further tightening. The Bank of France's updated projection will feed into the ECB's broader assessment, potentially affecting market expectations for the deposit facility rate and the yield curve. Traders can monitor NowPrice's rates page for real-time pricing on eurozone government bonds and ECB rate derivatives.

Looking ahead, markets will focus on the ECB's upcoming economic projections and any commentary from policymakers regarding the inflation outlook. The Iran war's evolution and its impact on oil prices will remain a key variable. Traders should also watch for the release of the Bank of France's detailed forecast, expected later this month, which may provide further clarity on the inflation trajectory and the central bank's reaction function.