ECB Draws Fury From Italy and Portugal in Backlash at Rate Hike

The European Central Bank’s interest-rate hike sparked a backlash from Italy and Portugal, while Spain’s deputy premier signaled her expectation that tightening is now over.

(Bloomberg) — The European Central Bank’s interest-rate hike sparked a backlash from Italy and Portugal, while Spain’s deputy premier signaled her expectation that tightening is now over.

As the close-run decision by President Christine Lagarde and colleagues in Frankfurt to raise borrowing costs by a quarter point rippled across the region, the political reaction echoed previous episodes earlier this year. 

“The ECB, which doesn’t care about the economic difficulties of families and businesses, is increasing the cost of money,” Italian Deputy Prime Minister and League Leader Matteo Salvini said on broadcaster Rete 4 on Thursday evening, according to Ansa. “Lagarde is living on Mars.” 

With the president warning that “the difficult times are now” after officials tightened policy again for an economy that they acknowledge is on the verge of a contraction, critical politicians focused on faltering expansion.

“This decision by the ECB places very important challenges for economic growth next year, and a slowdown in growth is expected as a result,” Portuguese Finance Minister Fernando Medina told reporters on his arrival at a meeting of counterparts in Santiago de Compostela in western Spain. “I’ve said more than once that I considered that a rise in rates at this moment would be a bigger risk for the economy’s progress.”

Italy has previously proven the epicenter of political anger at ECB decisions. It’s become typical there for members of Prime Minister Giorgia Meloni’s coalition to criticize rate hikes with increasing intensity in tandem with the pressure that each move places on the economy and its debt-servicing costs.   

Salvini spoke after Adolfo Urso, a minister in Meloni’s Brothers of Italy party, said that the move “will not, I believe, help the economic recovery of Europe.” Forza Italia Leader Antonio Tajani, who is another Italian deputy prime minister and its foreign minister, was also critical.


“I am disheartened because for months I have been saying that it is a serious mistake to fight inflation in Italy and Europe by raising interest rates,” he said on the same channel as Salvini, adding that price growth has been driven by commodities. “Increasing the cost of money means hindering investments and businesses — then the economy stops and jobs can’t be found.”

Tajani described the ECB’s policy as one that “certainly isn’t good for Italy’s economy” even if it may please northern European countries. The decision did indeed satisfy German Finance Minister Christian Lindner. 

“Inflation remains too high,” he told reporters at the meeting of European Union counterparts and central bankers in western Spain. “The ECB’s decision is understandable.”

Spanish Deputy Prime Minister and Economy Minister Nadia Calvino, who is hosting that gathering, kept a diplomatic tone to her reaction while still signaling her anticipation that the ECB has done enough.

“We will surely be paying great attention to the explanations of the ECB on their recent decision from yesterday, which apparently — and I suppose they will confirm — is probably putting an end to the very fast interest-rate increase that we have lived in the last 12 months,” she told reporters.

Indeed, both investors and economists think that officials in Frankfurt are now done hiking and two typically more hawkish ECB officials said Friday that maintaining rates at the current 4% for a prolonged period may be sufficient to tame inflation.

–With assistance from James Regan, Alessandra Migliaccio and William Horobin.

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