Italian deputy PMs criticise European Central Bank’s new interest rate hike

Deputy Prime Minister’s Matteo Salvini and Antonio Tajani spoke out against European Central Bank (ECB) President Christine Lagarde’s announcement of a new interest rate hike in July, arguing it leads to a risk of recession.

Tajani (Forza Italia/EPP) said he is disappointed by Lagarde and warned against the risk of recession caused by too high rates.

“I don’t think it is in the interest of growth to keep raising interest rates”, Tajani said, stressing that he does not agree – in particular – with the fact that the ECB’s announcements on raising rates are made well in advance.

Also on the warpath was the other vice-premier and Minister of Transport Matteo Salvini (Lega/ID), who called the ECB’s decision “senseless and harmful” as well as against families and businesses.

“Does Lagarde have a variable-rate mortgage? Does she know how much the instalments are increasing? Who benefits from these absurd decisions?” asked Salvini, announcing that he asked for a meeting with the Italian representative on the ECB board “to discuss the problem and analyse solutions”.

The causes of inflation lead the deputy prime minister’s to disagree with Lagarde’s decision: energy prices for Salvini, raw materials and the war in Ukraine for Tajani.

“We suffer from inflation that is not due to an internal fact, like in the US. In that case, yes, it is right to raise interest rates”, explained the Forza Italia leader, who recently took over after Silvio Berlusconi’s departure.

“Raising the cost of money means putting businesses in difficulty. Entrepreneurs who want to invest give up their projects and wait for better times”, he added.

Confindustria’s vice-president for credit, finance and taxation, Emanuele Orsini is of the same opinion and fears that investments in Italy could come to a complete standstill.

“The last adjustment that raised the cost of money to 4% obviously caused a slowdown in investments, but now we risk them coming to a complete halt”, he said, pointing out that Italy is a country that strongly relies on investments and exports.

In 2021 investments grew by 18.6%, while in 2022, the growth was halved (9.4%). The forecast for 2023 is +0.2%. As for exports, on the other hand, goods worth €590 billion were exported in 2022 – €100 billion more than in 2021.

“Now, however, we need to be careful that the rate hike does not create a twisted inflationary spiral that could turn out to be well above estimates at the end of the year”, Orsini said.

(Federica Pascale | EURACTIV.it)