Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Portugal's PM urges ECB to be prudent in raising interest rates

Economy Oct 24, 2022 01:41PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Portugal's Prime Minister Antonio Costa speaks as he attends the European Union leaders' summit in Brussels, Belgium October 20, 2022. REUTERS/Piroschka van de Wouw

By Sergio Goncalves

LISBON (Reuters) - Portugal's Prime Minister Antonio Costa has urged the European Central Bank (ECB) to be prudent in raising interest rates from abnormally low levels, despite not expecting a dramatic increase in household bad loans in his country.

The ECB has been unwinding policy support over the past year and lifted rates by a total of 125 basis points at its past two meetings, its fastest pace of policy tightening so far.

Costa said he "understands the logic of normalizing monetary policy".

"(But) I think that the ECB, in all its independence, should be prudent in raising interest rates to control inflation", he told journalists.

The ECB targets inflation of 2% in the medium-term, but the rate in the euro zone was 10% last month.

Costa said the ECB should bear in mind that "inflation is not so much the result of increasing money supply and people's income".

He said inflation was more due to supply-side shocks such as Russia's war against Ukraine, which "aggravated the disruption of supply chains, which was already present in the post-pandemic period, and created an energy crisis".

Costa said households with variable rate home mortgages, which represent more than 90% of the country's stock of 1.4 million home loans, "should be aware that interest rates are on an upward trend".

But he's not too worried, noting an expected surge in non-performing loans (NPLs) during the pandemic failed to materialise.

Portugal's banks are still scarred from a debt crisis and a spike in NPLs after the 2010-13 recession. They have since reduced NPLs to a total of 11.4 billion euros ($11.3 billion) in June 2022 from a peak of 50 billion euros in June 2016, according to the latest Bank of Portugal data.

The NPL ratio for Portugal's banks was 3.4% of total credit in June, versus 17.9% in mid-2016, but above the European average of 1.95%.

($1 = 1.0133 euros)

Portugal's PM urges ECB to be prudent in raising interest rates
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email