Gabriel Makhlouf, a representative of the European Central Bank (ECB) and former senior official at the New Zealand and UK Treasuries, expressed concerns about Italy's bond-yield spread on Wednesday. This comes in the wake of controversial policies implemented by the Meloni government, including a poorly executed attempt to tax banks and a budget that Fitch Ratings has characterized as "significantly loosening".
These actions have unsettled investors, prompting Vitor Gaspar from the International Monetary Fund (IMF) to call on Italy to intensify its debt reduction efforts. Despite these developments, Makhlouf reassured that the ECB is equipped with a new crisis-fighting tool to maintain robust monetary policy across Europe.
Makhlouf also projected a return to relative stability in bond markets and hinted at a potential increase in borrowing costs during the forthcoming December ECB meeting. This forecast suggests that despite current uncertainties surrounding Italy's fiscal policies, there is confidence in the ECB's ability to manage potential disruptions and uphold financial stability across the region.
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