Italian minister warns ECB of risk from higher interest rates

The outlook for the Italian economy is improving but higher interest rates designed to curb inflation could pose a threat to growth, Italy's economy minister said on Saturday, sending a warning to the European Central Bank (ECB).

"Fighting inflation with monetary policy is not enough, recession cannot be the price paid for fighting inflation," Giancarlo Giorgetti said.

Giorgetti is from the League party which last month criticized the ECB for pushing ahead with its latest 50 basis point rate increase despite turmoil in the banking sector.

Speaking to the Ambrosetti business forum, Giorgetti confirmed that improvements in the first half of the year would allow Italy to slightly upgrade its official forecast for economic growth of 0.6% in 2023.

He added it would be difficult for the European Union when it comes to reintroducing budget rules that remain suspended until the end of 2023.

"The political climate of relaxation generated around budgetary rules in these crisis years by COVID and war will not make it easy to return to any rule," he said.