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Italy fumes at ECB's Lagarde after Milan market plunge

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Italian leaders expressed their "disgust" Friday with comments from European Central Bank chief Christine Lagarde that saw the Milan exchange suffer a historic collapse.

[ROME] Italian leaders expressed their "disgust" Friday with comments from European Central Bank chief Christine Lagarde that saw the Milan exchange suffer a historic collapse.

The ECB surprised markets on Thursday by refusing to lower its main interest rate in response to the coronavirus pandemic.

Ms Lagarde appeared to make matters worse by noting that the institution was "not here to close spreads" between the borrowing costs of member states.

Her words contributed to a record 17 per cent drop on the Milan exchange and a spike in the yields of Italian bonds.

"Let me express my disgust, horror and shame for what is happening in Europe," Italian far-right leader Matteo Salvini said.

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"The only help from Europe was to bring down the stock market and drive the spreads crazy. Yesterday, the Italians lost 68 billion euros(S$106.8 billion) in savings," he claimed.

"We will consider the possibility of asking for economic compensation."

The Milan stock exchange followed global markets higher on Friday and was back up 17.7 per cent at around 1230 GMT.

But the former IMF chief's comments made an impression with even more moderate politicians in Rome.

"President Lagarde objectively made a mistake yesterday," former Italian prime minister Matteo Renzi was quoted as saying by Italy's AGI news agency.

"I hope it is only a mistake of communication, not a change of line with respect to (former European Central Bank head Mario) Draghi's management," Mr Renzi said.

Ms Lagarde appeared to try to walk back her comments in an interview following the ECB press conference.

The ECB is "fully committed to avoid any fragmentation in a difficult moment for the euro area," she told CNBC.

But Italian Prime Minister Giuseppe Conte still expressed disappointment with Ms Lagarde's response to her first major crisis since becoming ECB head in November.

"The task of the central bank must be not to hinder but to help (government) interventions, creating favourable conditions for them," the AGI news agency quoted Mr Conte as saying on Thursday.

AFP

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