France approves Macron ally to lead central bank

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Macron ally leads central bank

Highlights

Moulin received sufficient backing from both National Assembly and Senate finance committees to become Bank of France governor despite opposition from several political parties.
Moulin will replace François Villeroy de Galhau as governor next month, giving President Macron control over the leadership change ahead of next year's presidential election.
As Bank of France governor, Moulin will join the ECB governing council and emphasized a vigilant stance on economic change, declining to pre-commit on June rate decisions.

Parliament vote clears leadership change

As reported by Financial Times, Moulin secured enough support in votes by the finance committees of both the National Assembly and the Senate, despite objections from the far-right Rassemblement National, the far-left La France Insoumise and the Socialists. It would have taken three-fifths of members across both committees to block the nomination, a threshold no previous candidate for the central bank post has failed to overcome.

Moulin is due to replace François Villeroy de Galhau, who is stepping down next month more than a year before the end of his term. Villeroy de Galhau has denied being asked to leave, but his departure allows Macron, rather than the winner of next year’s presidential election, to choose the next governor.

Until late April, Moulin serves as the top presidential adviser at the Élysée Palace, overseeing policy areas ranging from foreign affairs to the economy. He previously led the French Treasury and held several senior roles in the finance ministry, experience that supporters cite in backing his move to the central bank.

Independence concerns and ECB role

Opposition lawmakers argue Moulin’s recent political role undermines the perceived independence required for the head of the Bank of France. Éric Coquerel, who chairs the National Assembly’s finance committee and represents La France Insoumise, says before the vote that he cannot support Moulin because his previous posts are political rather than administrative.

Moulin tells lawmakers he remains independent and is not beholden to Macron or to any future president. He says he has served under different governments while keeping his convictions, freedom of thought and focus on the public interest intact.

At his hearing on Wednesday, Moulin says European central banks must stay alert to changes in the economic outlook and tighten monetary policy if necessary. He declines to say whether the European Central Bank should raise interest rates at its June meeting, but says the ECB must be able to consider the effect of its decisions on growth while preserving its price-stability mandate in a more volatile environment.

As Bank of France governor, Moulin will also hold a seat on the ECB’s governing council, giving him a direct role in euro zone monetary policy.

Our earlier report on Jay Powell’s exit from the Federal Reserve examined how his final weeks in office were shaped by political pressure and a renewed debate over central bank independence. We also outlined the policy backdrop he leaves behind—post-pandemic inflation missteps followed by aggressive rate hikes and a soft-landing narrative—as the institution prepares for a handover to Kevin Warsh.

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