The tenth consecutive increase in interest rates in the euro area – up to 4% – should have been the last in this cycle of increases, by far the most abrupt and aggressive of all time. However, the ECB stressed that interest rates are not expected to fall in the near future: financial markets do not expect interest rates to fall, at least, before next summer. But there is one factor that generates a lot of uncertainty about what the next steps will be: Unanimity in the Governing Council has disappeared and tension between members is increasing..
Only a “solid majority” decided to go ahead with another interest rate increase of 25 basis points. Christine Lagarde did not specify exactly what a “solid majority” means for her., when there are 21 votes (rotating). But the president of the ECB acknowledged that “some” members with voting rights would have preferred to have chosen to take a “pause”, a group among which, according to information obtained by the Observer, is the governor of the Bank of Portugal, Mário Centeno. . .
For several months, Centeno has recommended that the ECB be “patient” to allow time to pass and evaluate the impact of the increases already decided. At this Thursday’s meeting in Frankfurt, the The Portuguese voted once again against raising interest rates and was defeated. “The risk of ‘doing too much’ is becoming material“, Mário Centeno publicly warned in the note he published on September 4 on the Bank of Portugal website.
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Source: Observadora
