Hearing of François Villeroy de Galhau, Governor of the Banque de France  before the Section for the Economy and Finance of the French Economic, Social and Environmental Council Paris, 8 April 2020  “From the emergency crisis response to initial thinking on the post-crisis environment”  Press contacts: Mark Deen (mark.deen@banque-france.fr) and Deborah Guedj (deborah.guedj@banque-france.fr)  Page 1 of 8 Madam President, Vice-Presidents, Section Members Thank you for this “virtual” invitation, which is nevertheless essential to maintaining a productive dialogue on the economy between our two institutions during this crisis: the Banque de France is fully mobilised in the economic battle to support our businesses, and, of course, representatives of civil society such as yourselves are following the situation extremely closely. This afternoon, I will briefly present the findings of our monthly business survey published today. It is the first French survey to analyse the economic impact of the first fifteen days of lockdown. I shall then turn, in greater detail, to the economic policy responses: those introduced in the short term, for which there is a solid consensus, and those that will have to be devised once we emerge from the crisis. In this respect, questions remain open. ** I. Findings of the Banque de France’s monthly business survey: a substantial economic cost  In 2019, the French economy was defined by its resilience, as it better resisted the economic slowdown than its European neighbours, particularly Germany.
Since March, the Bank accelerated the withdrawal of the monetary impulse, with greater intensity than foreseen by analysts’ consensus, bringing the MPR to a level within the normal range. This, coupled with the changed external macroeconomic scenario due to the drop in commodity prices, managed to contain inflation expectations (figure 11). While in mid-year we expected inflation to be around 4% for much of the second half, the data have shown inflation hovering around 3%. The propagation of specific shocks has been similar to the historical average, but lower than that of 2007 and 2008. Today, in Chile and in a large part of the emerging world, inflation forecasts have been lowered and the risk of overheating has lost relevance (figure 12). For the same reason, while in mid-year we foresaw that the MPR would end the year 2011 close to 6%, in recent months we said that there will probably be no more increases, an opinion we have reaffirmed in our latest communiqués and I will come back to shortly. But first let me take a look at what is going on in the developed world. The 2008 crisis is not over yet The crisis of 2008 was not a typical recession because it originated in a financial meltdown, whose effects are deeper and its recovery, slower. This we know first-hand in emerging countries. In Chile we had one in the early 1980s.