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French central banker says any 2020 GDP forecast revision would be up

FILE PHOTO: Governor of the Bank of France Francois Villeroy de Galhau speaks during a news conference at the G7 finance ministers and central bank governors meeting in Chantilly, near Paris, France, July 18, 2019. REUTERS/Pascal Rossignol

PARIS (Reuters) - France’s economy is recovering largely in line with forecasts and any revision would be upward, Bank of France Governor Francois Villeroy de Galhau said on Thursday.

The French central bank forecast in June the euro zone’s second-biggest economy would contract 10% this year before rebounding 7% in 2021 and 4% in 2022, and is due to update its projections on Sept. 14.

“The recovery is roughly going as expected. If there is any change (to the forecasts), it would without a doubt be that 2020 is a little better than expected, which mechanically would make the recovery in 2021 and 2022 a bit less strong,” Villeroy told the French employers federation MEDEF’s end-of-summer conference.

Villeroy added the European Central Bank would keep supporting the recovery in the broader euro zone economy by maintaining low interest rates and abundant liquidity.

He also said that it was essential to have an inflation target over the medium term, reacting to a major revision on Thursday from the U.S. Federal Reserve of its monetary policy approach giving less weight to worries about high inflation.

The ECB’s inflation objective, which targets a rate of close to but less than 2% over the medium term, is one of the things it is looking at during a strategic review now underway.

“I don’t know what precise form that will take for us at the ECB, but you can be assured that a credible and symmetric inflation target will remain at the heart of our action,” Villeroy said.

Reporting by Leigh Thomas; Editing by Franklin Paul and Peter Graff

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