Italy says ECB rate cut too modest, shows lack of courage

Rome: Two Italian ministers criticised the European Central Bank after it cut interest rates by a quarter of a percentage point on Thursday, saying the move was insufficient and showed a lack of courage.

In a move that had been widely expected by markets, the ECB lowered its deposit rate by 25 basis points to 3.50%, following up on a same size cut in June.

“We need to be bolder,” Italy’s Foreign Minister Antonio Tajani told reporters. “A cut of 25 basis points is (too) little to revive growth. Being bold means making cuts of at least 50 (basis points).”

Industry Minister Adolfo Urso echoed his remarks, posting on social media platform X that the ECB had “disappointed expectations yet again … we need more courage, more urgency.” The ECB acts independently of governments.

Italy, with the highest borrowing costs in the euro zone and the bloc’s second highest public debt as a proportion of national output, has much to gain by a steep fall in ECB rates.

Tajani also called for the ECB’s founding treaty to be reformed.

“Today the European Central Bank is only concerned with fighting inflation, (but) it is not enough, we need a central bank that can manage the currency to promote growth,” he said.

Euro assets were little changed following the ECB’s move.

ECB President Christine Lagarde suggested to reporters that the bar to another cut next month was relatively high, highlighting that policymakers would be unlikely to have enough data to determine whether further easing was appropriate.