Piero Cipollone warns against hiking into a supply shock as France holds a 5 per cent deficit
Piero Cipollone said rate rises after a supply shock could dampen growth. France is trying to keep its deficit near 5 per cent, while Singapore core inflation reached 2 per cent after electricity tariffs rose.
Economics & Markets··Night
Cipollone on rates after a supply shock
In an interview published by the European Central Bank, executive board member Piero Cipollone said that hiking interest rates to stabilise inflation around the target after a supply shock could dampen economic growth, and that the task is to anchor expectations on a return to 2 per cent. Cipollone called the risk of stagflation rather remote and said the European economy is slowing while proving more resilient than expected, with inflation in line with the baseline scenario. On the digital euro he said the Eurosystem would not be able to link individuals directly to transactions. The interview was conducted on 10 August and published on 24 August.[1]
France seeks budget talks near a 5 per cent deficit
The French government called for rigorous parliamentary budget talks and said it would try to keep the deficit as close as possible to 5 per cent amid bond-market pressure. Finance Minister Roland Lescure said cutting taxes on large companies would be difficult. Government spokesperson Maud Bregeon said improving public finances would require rigour, while ruling out tax increases on citizens. The stance leaves little room on either the company-tax or household-tax side as borrowing costs stay in the debate, and it keeps the 5 per cent mark as a target rather than a figure already achieved.[2]
Singapore core inflation reaches 2 per cent
Core inflation in Singapore rose to 2 per cent in July from 1.6 per cent in June, the fastest pace since October 2024, after a regulated tariff increase pushed electricity and gas prices up 8.7 per cent. Headline inflation ran at 2.2 per cent year on year, with food at 2.2 per cent and services at 1.7 per cent. The Monetary Authority of Singapore and the Ministry of Trade and Industry still see core inflation staying elevated into 2027 before easing around the middle of that year. Electricity and gas inflation ran at 8.7 per cent in July, while services inflation was 1.7 per cent.[3]
