Inflation controlled, financial system resilient in 2025
The Banque de France's 2025 annual report highlights successful inflation control and a resilient financial system. The institution also details its efforts in payment innovation and financial inclusion.
Inflation's victory, rates cut
The Eurosystem, including the Banque de France, successfully brought inflation back to target in 2025.
Inflation in France fell to 0.7 percent, while the euro area reached 2.0 percent by year-end, aligning with the price stability objective.
This disinflation was achieved without triggering a recession, despite an exceptionally uncertain environment.
The process enabled four interest rate cuts in 2025, following four in the second half of 2024, bringing the main key rate down to 2.0 percent.
This led to continued improvements in financing conditions.
French GDP growth remained resilient at 0.9 percent in 2025, following 1.1 percent in 2024, despite international volatility.
Customs tariffs and a US-EU trade agreement caused economic fluctuations, while household consumption remained subdued.
The Banque de France also adapted to evolving payment methods, restructuring its cash centre network and advancing the digital euro project.
Resilience in an unpredictable world
The French financial system remained resilient in 2025, navigating external shocks and domestic fiscal uncertainties.
Banks and insurers demonstrated strong financial positions, with EBA and ECB stress tests confirming their robust shock-absorbing capacity.
Macroprudential measures, including a 1 percent countercyclical capital buffer and housing loan approval rules, further bolstered stability.
The Banque de France and ACPR actively addressed risks from climate change, nature degradation, and financial digitalization, contributing to central bank digital currency development and applying the Digital Operational Resilience Act (DORA).
This proactive stance aims to safeguard financial stability amidst evolving challenges.
A year of quiet achievements
The Banque de France's 2025 report highlights steady progress across its missions, showcasing a foundational role in navigating complex challenges.
While the declared victory over inflation is significant, persistent economic uncertainties, particularly regarding the fiscal trajectory, remain.
This underscores the ongoing need for vigilance and adaptive policy responses to ensure continued stability and trust.