The government reacts to ECB interest rates
“We are therefore risking a recession,” Minister Tajani commented on the news of another interest rate hike by the ECB in July, emphasizing that Meloni was right in his criticism of Frankfurt. “There is no risk of recession, it has already arrived in Germany,” Giorgetti specified.
The decision by the European Central Bank in July to announce another interest rate hike to combat inflation has caused great dissatisfaction in the Italian government. “I said what needs to be said in the offices of the Ecofin Council and the Eurogroup. There is no danger of a recession, it has already arrived in Germany“, commented the Economy Minister, Giancarlo Giorgettion the sidelines of Giorgia Meloni’s communications with a view to the European Council.
In her speech in front of the plenary hall, the President of the Council herself attacked the decision of ECB President Christine Lagarde. “Right to resolute fight against inflation – he said – But the ECB’s simple recipe for interest rate hikes does not seem to be the right approach for many. There is a risk that steady interest rate hikes will be a more damaging cure than the disease and will hurt our economies more than inflation itself“.
According to the Foreign Minister Antonio TajaniMeloni was right when he criticized the ECB: “It seems like a right choice to me. The ECB is independent, it is autonomous, but since it is subject to political control, unlike the Mes, we also have the freedom to make judgments, we did not say that Lagarde has to resign” he said speaking to reporters in Transatlantic.
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Tajani then stressed that it was wrong for Frankfurt to announce the rate hike a month in advance, a policy also criticized by outgoing Bank of Italy Governor Ignazio Visco: “European inflation is a different kind of demand-driven inflation than American inflation. We are dealing with exogenous inflation caused by the increase in energy prices as a result of the war in Ukraine“. It still is: “So we risk the recession“.
A few days ago, Lagarde stressed that no significant changes were in sight regarding the inflation outlook, which is why the ECB decided to make one new rate hike. “Inflation in the euro area is too high and likely to remain so for too long. But the nature of the challenge involved is changing. Inflation is falling as the shocks that initially pushed it up abate and our monetary policy interventions start to feed through to the economy. However, the effects of these shocks are still being felt, slowing the decline in inflation and making the inflation process more persistent‘ Lagarde explained.