France central bank says energy inflation has not spread

France's central bank governor Emmanuel Moulin said inflation triggered by the Middle East war has so far been confined to energy prices, with little sign of spillover into wages or the wider economy.

“Inflation is clearly what we see. It's clearly 100 percent energy,” Moulin told a panel of central bankers at the Istanbul Economic Forum on Thursday. “We see very little indirect effect. We see very small impact at this stage. And we don't see second-round effects.”

Moulin also said geopolitical tensions were feeding a wider financial shock, pointing to a correlation between oil prices, long-term interest rates in the United States and interest rates in Europe.

Bond yields have risen as inflation fears and concern over government spending increase borrowing costs. The European Central Bank and the US Federal Reserve have begun raising benchmark rates in recent weeks, citing the risk of further price increases.

Moulin warned in an interview with The Financial Times on Monday that France risked being “strangled by interest rates” unless public finances were brought under control. French political candidate Jean-Luc Melenchon criticised the comments, saying Moulin was effectively urging market speculators to punish France.