FILE PHOTO: Italian PM Meloni and EU Council President Michel hold a news conference in Rome
ROME: The recent surge in Rome’s borrowing costs show investors are positioning for a combination of weak growth and high debt, outgoing Bank of Italy governor Ignazio Visco says.
“Obviously you need to understand why markets may be worried,” Visco told the Financial Times.
“I don’t think it is speculation against the country. It is basically a concern aboutthe long-term potential growth rate of the economy.”
Investors are offloading Italian debt as nerves fray over Prime Minister Giorgia Meloni’s spending plans along with sluggish growth.
That’s widened the nation’s risk premium to levels that have previously irked European Central Bank policymakers.
Under its final budget plan, the government targets a wider budget deficit than previously set this year and next. Italy’s 10-year yield premium over its German counterpart rose to a nine-month high last Friday. The spread surpassed 200 basis points, a closely watched level by investors.
Visco urged Meloni to recognise that international investors have legitimate concerns with rising interest rates, high energy costs, tensions in the global trading system, and Italy’s rapidly aging population, according to the FT. — Bloomberg
