Marcelo fears another rate hike by the European Central Bank

The President of the Republic, Marcelo Rebelo de Sousa, said this Thursday that he was concerned about a possible new increase in interest rates by the European Central Bank (ECB) due to “still relatively high” inflation in the European Union.

Speaking to reporters at the Belém Palace on the sidelines of the Book Festival that began this Thursday, Marcelo Rebelo de Sousa commented on the inflation data, beginning by saying that “there are international signs that are starting to get a little worrisome.” namely, “still relatively high” inflation in some European countries.

Marcelo noted that the European average is 5.5%, which is higher than Portugal’s (3.7%), stressing that, in comparison, the country is in a “much better situation than the European average” .

“But this means that if Europe is like this and stays like that, then what result am I afraid of and what are we all afraid of? Is it the ECB? [Banco Central Europeu] there could be pressure for another rate hike and we expect a break as early as September,” he said.

The Portuguese head of state is waiting for other figures to be made public, but he stressed that this would not be “good news” for all Portuguese who have contracts with the bank and who could face increased mortgage payments.

The annualized rate of change of the consumer price index (CPI) increased to 3.7% in August, up 0.6 percentage points from July, according to an operational estimate released this Thursday by the National Institute of Statistics (INE).

Marcelo also warned about the fact that the INE data released this Thursday points to a second quarter with “zero growth” and noted that there are even economic situations in other European countries where “it doesn’t start, much worse than in Portugal.” “. .

“If so (…), then this means that the months of the end of the year and the beginning of next year may not be the same as we would like,” he stressed.

The President of the Republic also expressed concern about the “forecasts for the development of tourism in Europe (…), which are unfavorable in relation to the development” of the sector “by the end of this year and especially by the beginning of next year”.

“You know how it is [turismo] for us it is important. All this together could mean for a country like Portugal, which suffers greatly from the broader context, tourism not growing at the rate it has grown, exports not growing to the level at which it has grown, and obviously suffering economically as a result. height”. he added.

Asked what response he expects in the 2024 state budget, Marcelo Rebelo de Sousa replied that “there will definitely be a concern within the space available to spare Portugal from unnecessarily additional spending”, stressing that the government has already stated that “it do not intend to use part of the European loans linked to the PRR [Plano de Recuperação e Resiliência] that it was even announced that he might take advantage.

Marcelo believed that the government made this decision “for a good reason” and that it was “already a way to look into the future, predict this future and prevent this future.”

“On the other hand, there is a reserve, a reserve of money that can be used locally,” he believes, adding that “there is a reserve here even before other payments are made that can help offset next year what could exports or tourism are not coming.”

Marcelo Rebelo de Sousa stated that it was necessary to wait until “the investments that are already being made really reach their goal.”

Regarding the impact of inflation on rents and the possible re-setting of rent caps, Marcelo said that “the answer obviously can only depend on a very careful analysis of the evolution of inflation” in the coming months.

After talking with journalists, the President of the Republic visited the stands of the VI Book Festival in Belen, the palace gardens, bought several books, others were presented to him, took pictures and talked with some of the visitors present.

The Belem Book Festival is an initiative of the President of the Republic, in collaboration with the Portuguese Association of Publishers and Booksellers, which aims to promote works and authors in Portuguese.

This year the initiative will run until September 3 with free admission for four days, which will include readings, debates, music, movies or didactic games. According to the presidium, 68 publishers with 122 newsstands are taking part in the event this year.