France’s central bank governor, an ECB Governing Council member, said the Middle
East crisis has transmitted a geopolitical shock that is pushing interest rates
higher across all economies. He flagged a strong correlation between oil prices
and US and European long-term yields and said rate rises are affecting countries
regardless of fiscal strength. He added that the oil and gas-driven rise in
consumer prices has not materially spilled over into other sectors. Separately,
France — under market scrutiny as it seeks to narrow a large budget deficit —
was defended by the finance minister, who said French sovereign bonds are not
facing sales difficulties.
