2023-06-28 10:26:00
Italian Prime Minister Giorgia Meloni in Paris
by Angelo Amante and Gavin Jones
ROME (Archyde.com) – Italian Council President Giorgia Meloni on Wednesday criticized the European Central Bank (ECB) over its repeated interest rate hikes, calling it “simplistic” and likely to do more harm than good .
The ECB has raised the cost of credit by a total of 400 basis points since July 2022, bringing its deposit rate to 3.50% this month. She further hinted that a ninth straight rate hike was all but a given in July, as she forecast inflation to remain above its 2% target until the end of 2025.
“It is right to fight inflation hard, but for many people the simplistic recipe for rate hikes followed by the ECB does not seem to be the right path,” Giorgia Meloni told Parliament.
Several Italian leaders have attacked the ECB since it began its cycle of monetary tightening intended to curb inflation which has slowed but whose rate remains at 6.1% over one year in May.
In an interview with the daily La Stampa, Environment and Energy Minister Gilberto Pichetto Fratin said on Wednesday that the ECB’s “excessive” rate hikes might act as a “boomerang”.
His colleague at Foreign Affairs, Anonio Tajani, stressed on Tuesday that these repeated rate hikes were “not in the interest of growth”.
According to Giorgia Meloni, inflation in the community bloc is not linked to an overheating economy but to exogenous factors such as the war in Ukraine which has fueled rising energy costs.
“We have to factor in the risk that the constant increases in interest rates will hurt our economies more than inflation, that the medicine will end up doing more harm than the disease,” she said.
Speaking at the annual forum in Sintra, Portugal, ECB President Christine Lagarde said on Tuesday that the Frankfurt institution was facing a new phase of inflation that is likely to last for some time, which means that interest rates must continue to rise.
Discussions with central bankers emerging from this forum suggest a further rise in the cost of borrowing at the ECB’s July and September meetings despite signs that the eurozone economy is flagging.
Within the Governing Council of the ECB, the representatives of Italy, Fabio Panetta or Ignazio Visco, have often figured among the most members most in favor of a less restrictive policy.
(French version Claude Chendjou, edited by Blandine Hénault)
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