Bank of France Trims Growth Forecast, Sees Faster Inflation

The Bank of France cut its 2026 economic growth forecast, citing escalating energy costs driven by the Iran conflict’s market disruptions. This marks a downward revision from earlier projections. Inflation expectations were raised alongside the growth downgrade, reflecting persistent price pressures from energy volatility. The adjustment aligns with broader European Central Bank assessments of worsening economic conditions. The bank’s updated outlook includes adverse and extreme scenarios, modeling potential deeper downturns if energy prices surge further or geopolitical tensions intensify. These scenarios underscore heightened uncertainty. The revisions follow similar moves by other EU central banks, signaling coordinated concern over stagflation risks—stagnant growth paired with accelerating inflation—across the eurozone. Energy price shocks from the Iran war remain the primary driver, forcing policymakers to recalibrate monetary and fiscal strategies amid deteriorating macroeconomic stability.