Statements by the former governor of the Bank of Portugal and former Minister of Finance in his usual comments space O Trigo do Joio, every Monday on CNN Portugal
What if, in the blink of an eye, all of the European Central Bank’s (ECB) projections started to go overboard due to a geopolitical event that in itself causes the price of oil to fall, calms the markets and takes inflation to lower rates than the European regulator’s best case scenario? Would the cycle of rising interest rates continue?
Mário Centeno believes that an agreement between the US and Iran “could add more information to the ECB’s decision-making process and what seemed like a new interest cycle”, and the former governor of the Bank of Portugal recalls that “raising interest rates in a single meeting is something that from a monetary point of view does not make much sense”. For this reason, the former Finance Minister also believes that the cycle of increases predicted by the BC “can be reversed and reversed if the good news is confirmed and in fact the pressure on prices is much lower than what was projected”.
“From that day the war practically stopped”
This Monday, in his usual comments space on CNN Portugal – O Trigo do Joio -, Mário Centeno classified as “very positive” the momentum that seems to be making an understanding between Tehran and Washington plausible, but warns that “if we have to summarize in one word what there is to take from all this is caution”.
“There is a history of very great volatility in Trump”, highlights Centeno, adding that the world has already realized that “Trump’s economic policies are not sustainable”. “One of the most obvious consequences of this conflict is inflation, and just a few days ago Trump was saying he likes inflation,” he recalls.
For the former governor, Iran had little or nothing to do with the signing of the memorandum of understanding between Washington and Tehran, Mário Centeno explains that the closure of the Strait of Hormuz was “a shock of reality”, but argues that the real shock given to Donald Trump came from within the USA itself: “The Pentagon asked him for 200 billion dollars to continue the war and, since that day, the war practically stopped”.
Portugal has “the most dynamic job markets in Europe”
Speaking of the North American Economy, Centeno warns that some practices that have taken place in the USA, such as the method of buying or renting houses with the condition of only paying the respective installments or rents after a gap of a few years, are dangerous because they are “digging a hole between reality and the future” that sooner or later has the potential to implode.
On the contrary, it is in the national job market that the former governor finds economic support. Mário Centeno argues that legislators must “respect what the job market in Portugal is giving us, which, at the moment, is giving us a lot.”
“It is the most dynamic of the labor markets in Europe, only comparable to Spain’s, far above the behavior in terms of employment and wages in markets such as France or Germany”, he summarizes, remembering that this is a “market that will continue this trend if it is not disturbed by any institutional change that misaligns supply and demand”.
With the current idiosyncrasies of the national job market, Centeno points out that the data shows that “when a Portuguese person changes jobs they have a salary gain that, in that year, is double that of a person who did not change jobs”. “This is the way to progress in the market” and all Portuguese people should take this into account whenever they are looking for a new job or renew their skills, advises the former Minister of Finance.
