In less than two months, the European Central Bank is preparing to raise interest rates again. And while the hopeful outlook points to 0.5% growth, some say it could reach 0.75%, hitting those who have credit or are thinking about taking out a loan. In an interview with i Ricardo Evangelista, senior analyst at ActivTrades, has no doubt: “The question is no longer whether the ECB will raise interest rates or not. How much will it rise?” And in the face of this, he admits: “Families will have to start saving more because mortgage payments are rising, credit is getting more expensive, and even those things that are sometimes bought and that are a little extravagant are no longer available. be able to buy so easily.”
And he recalls that unlike what happened during the 2008/2009 crisis, when central banks were “very big hands and started monstrous buying programs, cut interest rates to low levels”, while governments took much more austerity “as if it were almost a cult of austerity”, now the roles are reversed.
And he admits without hesitation that “inflation is becoming a very big problem and that the end justifies the means”, hence understands the ECB’s interest rate hike at the next meeting on 8 September.
As a solution, Ricardo Evangelista acknowledges that all governments “are forced to take a more generous stance towards citizens and, above all, to avoid austerity scenarios that will further exacerbate this crisis.” But leaves a guarantee: “I would not want to be in the place of the people who have to make these decisions.”
Everything points to the fact that at the next meeting the European Central Bank (ECB) will once again raise interest rates. After it went up more than expected in July…
The trend is upward, and for now, a new interest rate hike is expected to be announced on September 8th.
So, is this new ascent inevitable?
I think so. The question is no longer whether interest rates will rise or not. How much will it rise? I can give you a forecast, I believe it will rise by 0.50%. Until recently, everyone expected growth to remain at 25 basis points, or 0.25%, but since then, several members of the ECB have spoken publicly, even this past weekend, during the Jackson Hole symposium in the United States. States where everyone assumed that the European Central Bank was really determined to control consumer price growth, to control inflation. This expectation indicating a 25 bps increase has now been lifted and everything points to a 50 bps increase scenario and even this week it was said that it could reach 75 bps. , which is almost 1%. If this more aggressive scenario materializes, I think the implications for the Portuguese market will be felt, especially in terms of Euribor rate hikes. In other words, mortgage payments will certainly rise, consumer loans will become more expensive, and this can lead to a domino effect in the economy, leading to higher unemployment due to reduced corporate investment. It could also cause a crisis for many businesses, which will be affected by the decline in economic activity on the part of families. In other words, families will have to start saving more because mortgage payments are going up, credit is getting more expensive, and things that are sometimes bought and are a little extravagant can no longer be bought so easily. All of this together has an impact on economic activity. However, everything will depend on the extent of the interest rate increase that will be announced on the 8th. If it is 25 basis points, then I think the impact will be diluted a little, but if more, then everything indicates that it will be at least 50 basis points, then yes, we will have the scenario that I described, in which life becomes more expensive and more difficult for families, and which will later have consequences for companies.
Families and businesses will have to pay the bill….
Clean.