Analyses used in monetary strategy

Economic analyses with different timeframes

The monthly business survey analyses the economic situation during the course of the previous month and is the main source of information used for short-term GDP forecasting. It draws on responses from 8,500 business leaders in the industry, services and construction sectors. It provides a good overview of economic trends and the business climate in France, in particular by sharing the opinions of business leaders concerning trends in orders and prices, as well as supply and recruitment difficulties.

This monthly report is rounded out every quarter by the publication of macroeconomic projections for France over a three or four-year horizon. This publication comprises projections for the main macroeconomic indicators (GDP, consumption, exports, etc.) and those related to the labour market (employment and unemployment), inflation and government finances.

The impacts of monetary and financial policy on the real economy

This macroeconomic analysis is complemented by a monetary and financial analysis using indicators that are especially useful for assessing the actual impact of monetary policy on the real economy: these include interest rates on financial markets, financing conditions experienced by economic agents and inflation scenarios.

These analyses are used to highlight trends affecting the financial system, such as an increase in non-bank financial intermediation, or to identify any obstacles to effective policy transmission to the real economy, such as market fragmentation or stress. In addition, because financial stability is a prerequisite for price stability, the Banque de France also analyses financial stability risks and their impact on inflation.       

Considerable human and technical resources

To produce these different short and medium-range analyses and forecasts, the Banque de France draws upon a pool of experts from various different backgrounds, i.e. statisticians, economists, economic forecasters and researchers. Their complementary expertise enables us to produce a comprehensive, 360° analysis of the macroeconomic, monetary and financial situation in France.

These analyses are underpinned by models developed to analyse and forecast the main macroeconomic variables, including:

GDP: short-term forecasts using sector dashboards and ISMA and PRISME forecasting models, based in particular on the monthly business surveys; medium-term forecasts and simulations of economic policies using

• FR-BDF and EA-BDF models)
• Inflation (the MAPI model)
• Public finances (MAPU model), etc.

Regularly updated models for forecasting inflation

To ensure the accuracy of its inflation forecasts, the Banque de France uses different reference models, which it adapts and updates in line with changes in the many structural economic factors that affect inflation. For example, in 2022, MAPI (Model for Analysis and Projection of Inflation), the main reference model, was revamped in three different ways:

• by simplifying its interaction with the FR-BDF macroeconomic forecasting model, which was itself updated in 2019
• by revising the method used to factor in changes in salaries following the Covid-19 health crisis
• lastly, by adapting to changes in the underlying classification of the components of the HICP (Harmonised Index of Consumer Prices) used at European level (Classification of Individual Consumption According to Purpose (COICOP))

Contributing to the production of statistics for the euro area and the European Union

As a member of the European System of Central Banks (ESCB), the Banque de France collects statistics from financial players resident in France. The results are then compiled by the European Central Bank (ECB) and Eurostat to produce statistics for the euro area and the European Union, or by international institutions such as the Bank for International Settlements (BIS), the International Monetary Fund (IMF) or the Organisation for Economic Co-operation and Development (OECD).

Statistics collected as part of the ECB's missions are defined in regulations available on the Banque de France (reporting entities page) and ECB websites. The Banque de France may round out the statistics collected with additional national data gathering that corresponds to specific French features or missions entrusted to it.