High ECB rates slowing down EU economy-Italian Minister
2022.12.16 13:13
High ECB rates slowing down EU economy-Italian Minister
Budrigannews.com – The Italian defense minister stated on Friday that the interest rate policy of the European Central Bank is hurting Europe’s economy and assisting Russia to undermine Western support for Ukraine.
The European Central Bank (ECB) raised its benchmark interest rate by 50 basis points on Thursday, which was widely anticipated. However, the ECB warned instead of ending such hikes, squelching hopes that they would end soon.
In an interview with Reuters, Italian Defense Minister Guido Crosetto, a senior member of Prime Minister Giorgia Meloni’s Brothers of Italy party, stated that the possibility of additional tightening was raising borrowing costs and causing harm to the economy, which was already weak.
He stated, “We are creating a situation that is Russia’s best ally right now from an economic and social perspective.” Because of this, Christine Lagarde’s actions are even more absurd,” he added.
Crosetto said that Russia was trying to take advantage of the continent’s economic crisis and get Europe to stop supporting Ukraine in an effort to end the war quickly and ease the energy crisis that Russia’s invasion had caused.
“The Russia war is likewise a mental conflict that is being battled in the squares of Europe other than in Ukraine. From their point of view, they have the advantage of dealing with democracies,” he added.
The ECB’s decision has been defended by policymakers from across the euro zone, who stated that tough action was required to bring inflation in the euro zone, which is currently at 10%, back to the 2% target set by the ECB.
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However, Crosetto claimed that the ECB was only adhering to economic theory and was unable to see the bigger picture. He urged Lagarde to address the issues faced by businesses as a result of her policies.
“You must use politics to justify this to your European citizens. “You are not a Martian,” he said, adding that Europe’s economic situation had deteriorated since the COVID-19 pandemic.
According to Crosetto, “they behaved one way with COVID, and in a completely different way now, as if we had economic growth, as if everything was fine, as if there wasn’t a war.”
It was echoed by other members of Italy’s conservative government, which took power in October, and it is extremely unusual for high-level political criticism of the independent ECB to be offered.
Matteo Salvini, Deputy Prime Minister, described the ECB’s actions as “unbelievable, baffling, worrying.”
Italy’s debt, which ranks second in Europe behind Greece, will be more expensive to borrow money from if interest rates rise. This will make it harder for the government to spend more money and keep the many promises it made before the general election in September.
