The president of the republic defended this Thursday that the European Central Bank (ECB) would have to respond to the “galloping rate hike” by the end of this year, which he saw as the wrong option in the current situation.
“It is worth thinking, and thinking as best you can, if this gallop is to be continued, because it may be the wrong, wrong way to solve the problem, neither that of inflation nor that of economic growth,” Marcelo Rebelo de Sousa told journalists, at the Calouste Gulbenkian Foundation, in Lisbon.
Speaking after hearing an intervention from former ECB Vice-President Vítor Constâncio on the issue, the head of state, in an initiative of the Order of Economists, expressed the hope that “it will reach European decision-makers within a month , in particular for the ECB, this concern”.
“To increase interest in this way, at this rate, isn’t it, to cure the patient, end up harming his health? Squeezing him, crushing him, thinking about saving him? This costs nothing in the life of people, namely in mortgages, and in life in general? Isn’t it more negative than positive in economies? That’s what has been discussed here today. That needs to be thought about next month, in the coming months, before we reach 2023.” , defended.
When asked whether the government’s proposal for the state budget for 2022, which was generally voted in parliament on Thursday, contains sufficient measures to help families, Marcelo Rebelo de Sousa replied that “during the debate in the specialty, the prime minister has already said there is room to comment on what has been announced so far”.
“Let’s wait, it’s another month,” he advised, referring to the latest global vote, scheduled for November 25.
When asked whether he fears a recession scenario, the president of the republic replied: “I don’t necessarily think so”.
Then, again resorting to the intervention of Vítor Constâncio, he mentioned that the former finance minister predicts that “inflation will decrease from a certain point in the following year and that the continuation of the rise in interest rates may have consequences, that yes, and drive the European economies into recession”.
“Making this analysis with numbers, with the experience he had with the ‘troika’ crisis, many people wondered when this galloping rise in interest rates does not need to be reflected and thought about whether this is the right way”, he added.
As for the renegotiation of interest rates on housing loans, Marcelo Rebelo de Sousa emphasized that the government’s announced intention is to legislate “on the budget side, although it may pose problems in the budget”.
According to the head of state, “all European governments are monitoring what central bank intervention is and how it affects interest rate hikes and people’s lives” and “that’s why it was worth starting with the problem”.
“How come, are you going to sustain 0.75 rises or very high rises in a row? How long and with what consequences? It’s worth thinking about,” he insisted.
The President of the Republic, who did not have his participation in this initiative to commemorate the 25th anniversary of the Order of Economists on his agenda, was the last to speak at the end of the session.
In a speech of more than half an hour, largely devoted to praising the intervention of Vítor Constâncio, he described the decisions of the Federal Reserve of the United States of America and those of the European Central Bank (ECB) as ultimately influenced by “political and electoral cycles”.
“Political analysis experts have now said that one of the possible reasons for the Federal Reserve’s behavior would have been to anticipate the recession, in time to see signs of recovery before the election in two years’ time. would be the target”, he pointed out. .
“But the same can be said in Europe: there are European political and electoral cycles, from the beginning the 2024 European elections, in May, but before that in some countries election acts next year,” continued Marcelo Rebelo de Sousa.
The head of state asked, taking into account “the time lapse of the ECB’s intervention in relation to the Federal Reserve, to continue raising interest rates, what impact this will have on the economic situation in 2023 and in 2024, and what it is, nor will it mean from the point of view of socio-political potentiation of economic effects”.
Source: DN
