France’s central bank chief has hit out at what he called “Trump-style” threats against him from far-left presidential candidate Jean-Luc Mélenchon, as he also ruled out any need for the European Central Bank to intervene now to help ease a French bond rout.
France’s rising borrowing costs and its struggle to clean up its public finances have become a growing focus of presidential election campaigns ahead of the vote next spring, with candidates increasingly fighting over how best to tackle the problem or coming up with radical solutions.
Earlier this week, leftist contender Mélenchon, of La France Insoumise (France Unbowed), took aim at Emmanuel Moulin, saying on X he had committed an “act of treason” and should be prosecuted after what he described as the central bank chief’s implicit meddling in politics and scaremongering.
In comments to the FT published on Monday, Moulin had warned of the risk that France would be “strangled by interest rates” and needed to act to clean up its public finances.
“I will not be intimidated and I will continue to say what I think, within the remit of my mandate,” Moulin told France Inter radio on Wednesday, asked about Mélenchon’s comments. “Until now I only knew of one country where there was a bid to intimidate the central bank head, it’s in [Donald] Trump’s America, with Jay Powell.”
Before Powell stepped down as Fed chair in May, he was the subject of repeated attacks from the Trump administration. The criticism has since continued, with the US president saying last month that Powell, who remains a member of the Fed board, should be forced to resign even after an investigation into a $2.5bn renovation project at the central bank’s Washington headquarters found no evidence of criminal wrongdoing.
Moulin denied he had been implicitly commenting on any proposals by Mélenchon or other parties when he warned about the risks France faces, and the need to pass the government’s proposed budget for 2027 that would help bring the public deficit back to 5 per cent.
French bond yields climbed again on Wednesday as the market gave up some of its recent recovery. Ten-year bond yields, which move inversely to prices, rose 0.15 percentage points to just shy of 4.9 per cent, on track for one of their biggest jumps this year.
The closely watched spread over 10-year German Bunds, which briefly surged above 1.5 percentage points last week, its highest since the Eurozone crisis, was back to almost 1.4 points.
Mélenchon is within striking distance of qualifying for an election run-off in May against frontrunner Marine Le Pen of the far right, according to some polls, though he is seen as unlikely to win. He has championed proposals such as throwing some French debt “on the fire”, or cancelling some bonds as one way of improving France’s interest-rate burden.
Mélenchon doubled down on Wednesday in response to Moulin. “Where else in the world does a central banker elected by no one give his political opinion on how the country is managed?” he said on X.
Le Pen on Tuesday presented her party’s own budget plans aimed at cutting the deficit, and contrary to Mélenchon is advocating spending cuts, though many economists have said some of her proposals do not stack up. Le Pen also called on the ECB to intervene in France once its public finances are on the mend, without saying how.
Le Pen cast her request as needed to help countries invest in priorities like defence and the green transition, not as a bailout.
Moulin said the ECB did not need to step in at present, adding “the conditions are not in place now for an intervention by the ECB”.
“It’s not here to deal with countries’ budget problems, it is here to fight against inflation and keep inflation around 2 per cent,” he told France Inter.
Additional reporting by Ian Smith in London