Why Is Portugal Warning Of More ECB Hiking?

Portugal warned that further interest rate hikes by rhe European Central Bank will put the Eurozone growth in peril. The country’s finance minister says tightening to date is not fully absorbed.

Further interest-rate increases by the European Central Bank would add to the dangers for the euro-area economy as it seeks to exit a recession, Portugal’s finance minister cautioned.

Inflation is already on a downward trend following an unprecedented bout of monetary tightening by the ECB, Fernando Medina said in an interview. Meanwhile, the effects of rate hikes to date haven’t yet been fully absorbed by households and companies.

Earlier this week, Constantinos Herodotou, the governor of the Central Bank of Cyprus and member of the Governing Council of the European Central Bank noted that inflation is worse than high rates. He added that monetary policy tightening is the only tool to fight inflation

Herodotou also indicated that high interest rates won’t be permanent. The European Central Bank is see on track to hike rates again at its next meeting on July 27.