Italian Prime Minister Giorgia Meloni has criticized the European Central Bank over repeatedly hiking interest rates to combat inflation, saying the “cure” may be worse than “the disease,” according to Politico.
The ECB raised its interest rates to their highest level in more than 20 years this month, taking the benchmark rate in the euro area to 3.5 percent, the highest since May 2001, and signaled another hike to come next month.
Addressing the Rome Parliament on Wednesday, Meloni called inflation “a hateful hidden tax” and said it was “right to fight it decisively, but the simplistic recipe for rate increases undertaken by the ECB does not appear to be the most correct path … One cannot fail to consider the risk that the constant increase in interest rates is a more harmful cure than the disease.”
Members of Meloni’s government have reacted critically after ECB president Christine Lagarde said on Tuesday that rates were likely to keep going up. Speaking at the Forum on Central Banks 2023 in Sintra, Portugal Lagarde said that the ECB’s work “is not finished. Barring a material change in the outlook, we will continue to hike rates in July.”
Italy’s Deputy Prime Minister Matteo Salvini called the decision senseless and harmful. “Does Lagarde have a variable rate mortgage? Do you know how much the instalments are increasing? Who benefits from these absurd decisions?” he said. Salvini added that he would seek a meeting with the Italian representative on the board of the ECB.
Foreign Minister Antonio Tajani said he was “disappointed” by Lagarde’s statement and disagreed with the decision. “I don’t think continuing to raise interest rates takes us in the direction of growth,” he said.