ContextSpeech by the Governor of the Banque de France at a GIC–Banque de France conference in Paris, presented as his last speech on monetary policy as Governor.
Why it mattersThe Banque de France Governor answers critics of central banks and explains how firmly to react to supply shocks.
Problems raised
Central banks have been effective but increasingly challenged.
Their price stability mandate is questioned.
Supply shocks tempt central banks to react too little.
Solutions proposed
Keep a clear focus on price stability and the 2% target.
Stay credible and responsive, as in 2022-23.
React firmly enough to supply shocks to limit inflation.
