Italian Prime Minister Georgia Meloni criticized the European Central Bank (ECB) on Wednesday for its repeated interest rate hikes, stating that it follows an approach that can do more harm than good.
The ECB raised interest rates to their highest level in 22 years this month, affirming its ninth consecutive rate hike in July as it expects inflation to remain above the target level of two percent until the end of 2025.
Speaking to parliament, Meloni stated, “It is right to combat inflation decisively, but for many people, the simplistic prescription of interest rate hikes pursued by the European Central Bank does not seem to be the right path.”
On the other hand, ECB President Christine Lagarde still sees inflation rates as high and believes that dealing with these levels will continue for an uncertain period of time.
In her opening speech at the ECB’s annual policy conference delivered yesterday, Lagarde stated, “It is unlikely that the central bank will be able to confidently announce that interest rates have reached their peak in the near future,” adding, “Barring a material change in the outlook, we will continue raising interest rates in July.”
Lagarde also warned that inflation has a firm grip on the economy, emphasizing that the bank intends to raise interest rates enough to “break this resolve.”
However, Lagarde acknowledged that inflation has declined from its highest levels ever last year, with energy prices falling and the bank implementing a series of rapid interest rate increases to curb rising prices by increasing borrowing costs and spending for consumers and businesses.
