Italian Central Bank Governor Ignazio Visco said that Rome’s recent rise in borrowing costs showed that investors were bracing for a combination of weak growth and high debt.
Visco, the outgoing term, added to the British newspaper “Financial Times”: “It is clear that there is a need to understand why the markets are worried,” according to Bloomberg.
“It’s basically a feeling of concern about the potential growth rate of the economy over the long term,” Visco said.
Investors are dumping Italian debt due to mounting tensions over Prime Minister Giorgia Meloni’s spending plans and slowing growth.
This has increased the country’s risk premium to levels that previously troubled European Central Bank policymakers.
Visco, who will be replaced next month by European Central Bank President Fabio Panetta after leading the Italian central bank for 12 years, called on Meloni to recognize that international investors have legitimate concerns about rising interest rates, rising energy costs, tensions in the global trading system and accelerating aging. Population in Italy, according to the Financial Times.
“That is why markets must respond with two things: first, a vision of the long-term growth plan,” Visco said. Secondly, work in the short and medium term regarding financial imbalances.”
Last Thursday, the Italian Parliament gave the final green light to a decree easing a controversial tax on bank windfall profits that spooked investors.
The right-wing government led by Prime Minister Giorgia Meloni received support for the plan to impose a tax on banks’ windfall profits, but gives them the option of avoiding payment if they set aside additional capital reserves. Parliament’s vote (Thursday) was the final step needed for the legislation to be binding.
Meanwhile, data from the Italian Statistical Office revealed last Friday that retail sales in the country declined during the month of August, after rebounding the previous month.
Retail sales declined in August by a monthly rate of 0.4 percent, after rising by 0.4 percent in the previous July. Economists had expected retail sales to stabilize in August.
Sales of non-food goods decreased by 0.2 percent during August, while sales of food goods decreased by 0.3 percent. On an annual basis, the growth rate of retail sales declined to 2.4 percent compared to 2.8 percent in July.
Sales through e-commerce platforms recorded an increase of 1.4 percent in August compared to the same month last year, following an increase of 2.2 percent in the previous month.
The data also showed retail trade volume falling by 0.5 percent on a monthly basis, after falling by 0.3 percent in July.
2023-10-09 01:21:34
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