Banco de Portugal Governor Mário Centeno said on Friday that it was “highly likely” that the European Central Bank (ECB) would raise interest rates by 50 basis points in February, as a 75 basis point hike is highly unlikely.
“If the numbers we have on the table are confirmed, it is almost as likely that there will be a rate hike in February that is identical to the rate hike we just decided, as it is unlikely that this hike will be 75 basis points.”said the governor of Banco de Portugal (BdP) at the press conference to present the December Economic Bulletin in Lisbon.
A day after the European Central Bank (ECB) announced a 50 basis point rate hike, following two consecutive 75-point increases, Mário Centeno believed that “going back to 75 basis points is a very low probability event”🇧🇷
The head of the Portuguese banking supervisor substantiates the statement with the information and forecasts available to date.
“It was with such confidence that yesterday’s decision [quinta-feira] has been taken”said.
However, he stressed that the central bank’s decisions are taken meeting by meeting, based on updated data, warning that the impact of the tightening of financing conditions is not immediate, so the “risk of over-acting is very high”.
While he believes that the final interest rate is “still very difficult to estimate”, he pointed to a range between 1.75% and just over 2% for the neutral interest rate.
With the ECB’s decision taken this Thursday, the MRO rate now stands at 2.5%, the highest level since the end of 2008, the deposit rate at 2% and the standing liquidity facility rate rises to 2.75%.
The institution led by Christine Lagarde slowed the pace of rate hikes but warned it would continue to raise them “significantly”, showing determination in the fight against inflation, which remains “too high”.
“We Still Have a Way to Go”🇧🇷 “we have to move on”🇧🇷 “we’re going to have a long game”were some of the phrases used by Christine Lagarde, President of the ECB, to convey the central bank’s strong message after the last meeting of a busy year.
Source: DN
