2023-07-28 13:00:52
European Central Bank’s “nine consecutive plus” hits the Italian economy, parliamentarians call for the removal of President Lagarde
2023-07-28 21:00:52 Source: Financial Association shared to:
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A senior Italian lawmaker is finally calling for ECB President Christine Lagarde to be sacked following the ECB raised interest rates for the ninth time in a row.
The Italian MP wrote on social media,Lagarde ‘must be expelled’. Before the European Central Bank raised interest rates once more by 25 basis points, Italian Deputy Prime Minister and Foreign Minister Tajani also said that he did not agree with the European Central Bank’s decision to continue raising the cost of borrowing in the euro zone.
According to Tajani,Raising rates once more would be a mistake that would cripple businesses and put the economy at risk of recession.He pointed out that, unlike the situation in the United States, the inflation facing Europe is caused by the crisis in the supply of raw materials caused by the conflict between Russia and Ukraine.
The European Central Bank announced yesterday that it will raise the main refinancing rate, marginal lending rate and deposit mechanism interest rate to 4.25%, 4.50% and 3.75% respectively from August 2. Since the start of the rate hike process in July last year, the bank has raised interest rates nine times in a row, with a cumulative rate hike of 425 basis points.
The rate hike is still due to inflation in Europe. The European Central Bank said it would use inflation data as a basis to bring the key interest rate in the euro area to a sufficiently high and restrictive level, and maintain it at this level if necessary, to promote a fall in inflation.
But higher borrowing costs to curb inflation have weighed on Italy’s already stretched public finances, with high interest rates hurting consumers as both borrowers and taxpayers, while hurting the economy increase.
According to data, the loan interest rate has exceeded 4.80% in July 2023. After the interest rate increase, it means that the monthly installment payment of the borrower is 63% more than the initial loan amount, that is, an extra monthly payment of 286 euros. Italy’s main business association warned earlier this week that economic momentum was showing signs of weakening.
Last month, Italian Prime Minister Meroni said in parliament that it was wrong for the European Central Bank to simply raise interest rates to deal with inflation, and its negative effects would be greater than the impact of inflation. A simple rate hike scenario does not seem to many to be the right path.”
“We cannot dismiss the risk that the constant rate hikes are a more harmful cure than the disease itself,” Meloni said.
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