Don't fuel more uncertainty, French central banker warns after market rout

FILE PHOTO: The Paris Europlace International Financial Forum in Paris

PARIS (Reuters) - Policymakers need to be careful to avoid adding to uncertainty wracking financial markets and spurring volatility, France's central bank head, Francois Villeroy de Galhau, said on Tuesday.

While recent volatility in markets could in part be explained by flows to the dollar on account of its safe haven status, Villeroy also singled out the British government's announcement last week of plans for a "massive" budget deficit, which triggered a spike in UK interest rates.

"It is vital to not add uncertainty to uncertainty and to stay the course," Villeroy told lawmakers on the finance commission in France's National Assembly.

That meant, he said, staying focused on price stability in terms of European monetary policy and keeping French fiscal policy fixated on spending targets and reducing debt over time while coordinating internationally.

"Going it alone is counter-productive," Villeroy added.

His concerns chimed with comments on Monday by a senior U.S. Federal Reserve official, Atlanta Fed President Raphael Bostic, who told the Washington Post that the new UK fiscal plans risked adding to economic stress in Europe and the United States.

(Reporting by Leigh Thomas, editing by Tassilo Hummel)