Italian Prime Minister Giorgia Meloni slammed the European Central Bank’s monetary policy, doubling down on criticism from her two deputies.
“The simplistic recipe of increasing interest rates isn’t seen by many as the right path,” she told parliament on Wednesday. “It cannot be ignored that constantly increasing rates risks harming our economies more than it reduces inflation, making it a cure that does more harm than good.”
Meloni echoed remarks on Tuesday by deputy premier Matteo Salvini, who called the prospect of a further tightening of monetary policy next month “nonsense and dangerous.” Antonio Tajani, another Italian vice premier, said the ECB risked triggering a recession.
Italian inflation slowed to 6.7% in June from 8%, a more marked deceleration compared with what’s expected for much of the euro area, though still well above the central bank’s 2% goal.
The ECB has already increased rates by 400 basis points since last July — an unprecedented run of tightening — and another move next month looks all but assured. What happens after that is still open, though some policymakers have said more hiking after the summer break might be inevitable to tame inflation.
“I think it would hurt the credibility of the European Central Bank if we did something different from what we are actually doing,” Governing Council member Madis Muller told Bloomberg TV’s Francine Lacqua. “It is in the interest of our credibility to indeed make sure that we do get inflation down to a much lower level. Doing otherwise would really be a problem not only for the central bank but really for the people and for the economy as a whole.”
Italian politicians aren’t alone in their criticism. Portugal’s Finance Minister Fernando Medina told parliament on Wednesday that he has personally voiced concerns to ECB President Christine Lagarde about the impact of higher borrowing costs on his nation, saying that households there are “particularly vulnerable” to rate hikes.
Last week, his Spanish counterpart, Nadia Calvino, said her country probably doesn’t need more ECB action, though she acknowledged that officials in Frankfurt are serving the wider euro zone.
Meloni spoke at a sensitive moment for Italy after nominating European Central Bank official Fabio Panetta to succeed Ignazio Visco as Bank of Italy governor. That move risks raising the question of whether the country can keeping the spot for itself on the Frankfurt institution’s Executive Board, as has been euro-zone convention until now.
In her speech, Meloni also confirmed that the ratification of a small reform of the European Union bailout fund isn’t on the cards for now, saying the government’s policy is dictated by the national interest. Italy is the only country that still hasn’t signed off on the changes.
--With assistance from Alessandra Migliaccio and Henrique Almeida.
(Updates with Portugal in seventh paragraph)
