Nervous technocrats in Rome will be keeping their fingers crossed that the ECB may not have to raise interest rates too much
Save time by listening to our audio articles as you multitaskJust now nerves in Rome are a little jangled. Annual inflation across the euro zone rose to 7.5% in April.officials have been warming up markets for a possible interest-rate rise as soon as July. That would first require an end to the central bank’s main bond-buying programme. The yield on ten-year German bunds has surged in anticipation.
Italy has long been the weakest big link in the euro-zone chain. It has emerged from the pandemic with government debt of 151% of, the highest of any large economy bar Japan . In the right conditions, such debts are manageable. Indeed, if Italy’s nominalgrowth rate can stay ahead of the interest rate it pays, the debt burden would fall—as it did last year, when the economy bounced back from recession.
If sustained, higher yields will over time raise the cost to Italy of servicing its debts. Borrowing costs of 3% are not ideal. But Italy has locked in low interest rates on the stock of its existing debt, which has an average maturity of seven years. Over the longer haul Italy should be able to manage nominalplus 2% inflation, say.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
The Chanel jacket that launched a thousand copies – and why that’s OK | Jess Cartner-MorleyKeira Knightley got married in one, Rihanna pairs hers with trackies … and with copies rife on the high street, we can all afford a Chanel lookalike
Read more »
Who Is Ellen Barkin – And Why Is She Key To The Depp Vs Heard Trial?Ellen Barkin, an ex of Johnny Depp, has been on Heard’s witness list since March. Read all about her career, romantic history and time with Depp on Grazia.
Read more »
Why Not Try A Cork Wedge This Summer?The divisive shoe is beloved by everyone from Kate Middleton to Snooki.
Read more »
Reasons why the tech stock crash may be far from overThe axe is hanging over high-growth companies with stretched valuations
Read more »
Why does Sadiq Khan want to legalise cannabis, asks TOM LEONARDTOM LEONARD: The drug's mood-altering and hallucinogenic effects are well known - and Sadiq Khan has already shown he's amenable to ending Britain's ban on marijuana.
Read more »
Coleen Rooney tells High Court why she hatched Wagatha Christie plotColeen Rooney told the court she was 'in a vulnerable situation' after husband Wayne was caught drink-driving with Laura Simpson in 2017. She said she didn't know how her marriage was going to work out
Read more »