French Finance Minister Bruno Le Maire urged the European Central Bank not to raise interest rates again, joining a cohort of politicians reacting to Thursday’s hike in borrowing costs.
“We are on the right track to reduce inflation,” Le Maire told Bloomberg Television on Friday in the western Spanish city of Santiago de Compostela, where he attended a meeting with euro-area counterparts on Friday along with ECB President Christine Lagarde. “Enough is enough!”
Le Maire added that the level of 4% reached on Thursday is now “very high” and the right setting to reduce inflation, in remarks that hint at limited patience for the apparent appetite of hawkish policymakers to keep raising rates if necessary.
The Frenchman’s comments were more diplomatic than those of politicians in Italy and Portugal, who openly slammed the close-run decision by Lagarde and her colleagues to deliver another quarter-point move.
Representatives from each of Italy’s coalition parties have so far weighed in with fury, including League Leader and Deputy Prime Minister Matteo Salvini, who joked scornfully that “Lagarde is living on Mars.”
It’s the impact on economic growth that worries politicians most. The ECB’s own forecasts show the euro zone is on the verge of a contraction, and Lagarde herself told journalists that “the difficult times are now.”
“This decision by the ECB places very important challenges for economic growth next year, and a slowdown in growth is expected as a result,” Portuguese Finance Minister Fernando Medina said as he arrived in Santiago de Compostela. “I’ve said more than once that I considered that a rise in rates at this moment would be a bigger risk for the economy’s progress.”
His Iberian colleague Nadia Calvino, the Spanish deputy prime minister and economy chief who is hosted the gathering of counterparts, took a tone similar to Le Maire, avoiding outright criticism but expressing an aspiration that the ECB won’t hike again.
“I hope they get it right,” she told Bloomberg Television. “From the national perspective, I also hope they stop now, because our inflation rate is already quite low.”
In contrast to his outspoken counterparts, German Finance Minister Christian Lindner seemed satisfied with the result, saying that the decision “is understandable.”
Le Maire and others may find comfort in the views of both investors and economists, who now firmly anticipate that the ECB is now done hiking.
Similarly most policymakers indicated that a deposit rate of 4% is probably high enough to tame inflation, though some hawks insist the door should be still open for another move if needed.
--With assistance from Alessandra Migliaccio and Alan Katz.
(Updates with other ministers, starting in fourth paragraph)