Italy orders credit curbs to help control inflation

Italy's central bank imposed severe curbs on domestic and foreign borrowing to help fight soaring inflation and a massive trade and balance-of-payments deficit. The Bank of Italy said that Italy's inflation rate of more than 21 percent was the highest in Western Europe, making exports uncompetitive, while soaring oil costs had been reflected in an $18 billion trade deficit.

The bank said foreign-currency borrowing should be frozen at last year's level, except for credits to push exports, while domestic credit growth should be cut to 12 percent from last year's 20 percent. The bank said the measures were designed to put a brake on the economy with ough penalizing exporters.