Italy "responds" to ECB President's comments, worries about economic recession

On June 27, Italian Deputy Prime Minister and Foreign Minister Antonio Tajani said that high interest rates put the country at risk of recession.

Street in Rome, Italy. (Source: Reuters)

On the same morning, at the Central Bank forum in Sintra, Portugal, European Central Bank (ECB) President Christine Lagarde stated, "unless there is a significant change in the inflation outlook, we will continue to raise interest rates in July."

Commenting on the statement at a meeting of the national federation of independent trade unions in Rome, Mr. Tajani said: "I do not think that further interest rate increases will support growth. In particular, I do not agree with premature announcements like Ms. Lagarde did.

Inflation in Europe is different from the US, which is due to the increase in raw material costs due to the Russia-Ukraine conflict. Today, increasing the cost of capital means putting companies in a difficult position. With interest rates so high, we are at risk of recession."

In its latest report published on June 26, the Italian Employers' Confederation (Confindustria) assessed that the country's economy is showing signs of weakness, especially in the industrial sector.

“Signs of weakness continue to increase, especially in the manufacturing and construction sectors, although GDP in the first three months of this year increased by 0.6% compared to the same period last year,” Confindustria said in a report.

Confindustria said that while the service sector remained strong and employment was rising, rising interest rates “are hampering consumption and investment, while weakness in foreign markets is slowing Italian exports”.

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