The attack last Friday, which left one dead and seven wounded, has unleashed a bitter debate over racism in French politics and the media as the country grapples with a broad set of social grievances, months ahead of a presidential election

International News via Reuters:

President Emmanuel Macron has accused far-right politicians including in Marine Le Pen’s National Rally of fostering an “atmosphere of racism” across France, days after a racially motivated killing in a Paris suburb.

The attack last Friday, which left one dead and seven wounded, has unleashed a bitter debate over racism in French politics and the media as the country grapples with a broad set of social grievances, months ahead of a presidential election.

“There are political movements which have led to … a kind of disinhibition of speech, an ambient racism,” Macron told YouTube influencer Hugo Decrypte in a lengthy interview released late on Wednesday. 

He cited the National Rally and “those close to it” as responsible — a statement quickly rejected by members of the anti-immigration party that is leading in polls.

RN lawmaker Jean-Philippe Tanguy told TF1: “It’s Macron who has run France for the past nine years. It’s on his watch that antisemitism, homophobia and hate has spread through France. He is to blame.” 

‘WORDS CARRY WEIGHT’

French politicians on all sides have traded accusations of racism in the wake of the killing of 26-year-old Pengo Bossio Wangi in Trappes, a culturally diverse town 20 km (15 miles) southwest of Paris.

Anti-terrorist prosecutors said on Thursday the 39-year-old suspect, named Kevin T, acknowledged during questioning seeking victims of “African or Muslim type”. His belongings included a copy of Hitler’s book “Mein Kampf” and stickers mentioning the RN — though he said he did not support any particular party.

RN senator Edwige Diaz this week doubled down on comments by Jordan Bardella, now the party’s leader, who in 2021 called Trappes a “mini-Islamic state”. She said there was nothing wrong in that description.

“We can speak of a somewhat toxic climate in which certain people are constantly portrayed as suspicious or illegitimate,” said Zineb Alami, lawyer for Bossio Wangi’s father.

“Words carry weight,” she said.

Numerous politicians on the right, including Bardella, and media commentators have blamed the rioting and looting that took place after street protests this month on immigration, without giving evidence. At a march in memory of Bossio Wangi on Sunday, people in attendance blamed the media coverage for inciting racial hatred.

Macron’s minority centrist government also stands accused of not doing enough to tackle the spread of racist and far-right attitudes in society.

“The normalisation of the ideas of the far-right extends beyond the National Rally into the ranks of the government,” sociologist Solene Brun told Reuters.

Aurore Berge, the minister for gender equality and anti-discrimination, was urged in parliament this week to take back her comment last month that it was legitimate to discuss the “Great Replacement”, a far-right conspiracy theory that has been invoked by perpetrators of far-right attacks around the world in recent years.

In addition to the Trappes attack, far-right activists looking for confrontations with protesters were spotted across more than a dozen French cities last week, according to authorities.

Writing and reporting by Layli Foroudi, Juliette Jabkhiro, Mark John; Editing by Andrew Heavens

In a decision published hours after ECB President Christine Lagarde announced she would step down early, the ECB warned risks to inflation were skewed to the upside given a recent surge in oil and gas prices

International News via Reuters:

The European Central Bank left interest rates unchanged in a well-telegraphed move on Thursday but clearly hinted at another hike in December with a warning that high and rising energy costs were fuelling inflation risks.

The ECB has raised rates twice this year to prevent an Iran war-induced energy price jump from becoming entrenched and has signalled that more may be needed, even if it was not in a hurry without evidence of dangerous second-round inflation effects. 

In a decision published hours after ECB President Christine Lagarde announced she would step down early, the ECB warned risks to inflation were skewed to the upside given a recent surge in oil and gas prices.     

Lagarde went even further during her post-meeting press conference, saying the direction of travel for rates was clear and that policymakers had debated a hike on Thursday before agreeing to wait until December to gather more data.

“The interim meeting period will be information-rich,” Lagarde said. “That will actually help us determine whether the situation that we see now, which could have warranted a hike, is going to be confirmed, and in that case the sense of direction is quite clear.”   

Sources at the meeting told Reuters a hike on December 17 was now all but certain given the surge in energy prices but policymakers expected to pause thereafter in light of a recent, sharp rise in market-based borrowing costs.

ECB estimates circulated before Thursday’s meeting showed that the latest increase in bond yields would lower economic growth by a cumulative 100 basis points and inflation by 90 basis points in 2027-28 compared to the September baseline projection.

FRANCE DEBT MARKET TENSIONS

The euro zone’s central bank will have to walk a narrow path in the months ahead.

On the one hand, it is battling to prevent high global energy prices developing into a longer-term inflation problem for the 21-country currency bloc.

On the other, it is having to contend with sharp rises in government borrowing costs — especially in debt-laden France — that have triggered questions about whether it would step in if the market moves threatened to get out of control.

Lagarde stressed that governments needed to comply with the European Union’s fiscal rules to qualify for ECB help under its Transmission Protection Instrument. 

“Should market developments threaten the smooth transmission of our monetary policy, including through unwarranted and disorderly market movements, we have instruments available to respond,” she said.

Economists have also warned the increase in borrowing costs is likely to curb the flow of credit and slow the economy. France is now having to pay a decades-high 155 basis point premium over Germany to borrow for 10 years.     

“We think we are probably quite far away from a situation in which the ECB would intervene in bond markets,” economists at ABN AMRO wrote. “However, the ECB might be firing a warning shot.” 

Lagarde said that bond market yields were likely to stay high for heavily indebted euro zone members, which the ECB needed to take into account when setting rates.

This is why the vast majority of economists polled by Reuters see just one or two more hikes before the current tightening cycle ends.

“Although the ECB remains data-dependent and is not committed to a specific interest rate path, the overall tone has shifted toward fewer rate hikes,” Ulrike Kastens, a senior economist at DWS, said.

Reporting by Balazs Koranyi and Francesco Canepa; Editing by Catherine Evans