Italy Slams ECB For Hiking Borrowing Costs

Ministers from Italian Prime Minister Giorgia Meloni’s right-wing government have criticised the European Central Bank (ECB) for raising interest rates.

The ECB on Thursday raised interest rates by half a percentage and kept further hikes firmly on the table to bring runaway inflation under control.

On Friday, Italy’s Foreign Minister and Deputy Prime Minister Antonio Tajani said it was “fair” to criticise such moves because they harm economic growth. He said; “I have always been very sceptical on the decision to raise rates in Europe.”

Also, defence minister Guido Crosetto, a close ally of Meloni said; “I don’t understand the Christmas present [ECB] President [Christine] Lagarde has decided to give Italy.

“Raising interest rates makes no sense while raising capital requirements for banks and tightening sovereign bond purchases is “crazy”.

Alongside its rate hike, the ECB on Thursday also laid out plans to drain cash from the financial system as part of a dogged fight against inflation.

The ECB has been raising rates at an unprecedented pace to rein in prices that have soared since the COVID-19 pandemic and following Russia's invasion of Ukraine.

The ECB also laid out plans to stop replacing maturing bonds from its 5 trillion euro portfolio. Under the plan, it will reduce monthly reinvestments from its Asset Purchase Programme by 15 billion euros starting in March and revise the pace of balance-sheet reduction from July.