The governor of the Bank of Portugal (BdP), Mário Centeno, said this Friday, in Cascais, that the first signs of an increase in inflation began in 2021, with clear reasons, and warned of the risks of contagion.
“We already had the first signs of inflation during 2021 and from there it increased very quickly. The reasons were very clear. […]such as the difficulties in recovering from the Covid-19 pandemic”, said Mário Centeno, who was speaking at the session “Inflation Rises: What’s Next?”, within the framework of the Estoril Conferences, at Nova School Business & Economics ( SBE), in Carcavelos, Cascais.
The former Minister of Finance stressed that it was not possible to achieve a maximum rate of 2%, pointing out that until Covid-19 it had a low value.
However, he pointed out that there was great success in the response to the covid-19 pandemic, with policies aimed at mitigating its impact.
The economy “is a very complex world, a complex network with millions of connections and vertices. At a certain point we realized that something was wrong, but we couldn’t get him to recover. It’s easy to turn it off, but hard to put it back on,” he added.
In this session, Centeno recalled that, when it comes to a shock that is transitory from the outset, economic agents anticipate a recovery.
However, when the scare should be temporary and it is not, “contagion effects begin to occur.”
The BdP governor also mentioned that the problem, during a crisis, is not the crisis itself, but the way in which the preparation to face it is carried out.
In this sense, Mário Centeno pointed out that, “fortunately”, the Portuguese “are better prepared to face crises”.
Centeno also wanted to leave an “optimistic” view by pointing out the economic recovery in Portugal, with emphasis on the growth of private consumption.
“An economy that is going through a very bad time no longer shows these kinds of signs,” he said.
Even so, he called for “caution”, stressing that the price level is a fundamental indicator for decision-making.
On Thursday, Centeno had already argued that procyclical measures should not be implemented to respond to the impact of inflation.
“What I am appealing again is that procyclical policies are not promoted that may later have to be corrected with other policies,” Mário Centeno told reporters on the sidelines of the Estoril conferences.
Asked, at the time, about the impact of inflation, when the Government is preparing to approve the package of measures to support household income next Monday, the head of the banking supervisor said: “we must not be exuberant when the economy grows, when unemployment is at historic lows, when wages are growing more than in recent years, when the economy is recovering.
Source: Observadora
