Ricardo Evangelista. “Families need to start saving because mortgage payments will go up”

Less than two months later, the European Central Bank is preparing to raise interest rates again. And if the encouraging prospects point to a rise of 0.5%, some say it could reach 0.75%, which will penalize those who have credit or are considering a loan. In an interview with i, Ricardo Evangelista, chief analyst at ActivTrades, had no doubts: “The question is no longer whether or not the European Central Bank will raise interest rates. How much will they rise?”. Faced with this, he admits, “Families have to start saving more, because mortgage payments are going up, credit becomes more expensive, and even things that are sometimes bought and that are a little extravagance are no longer available. To be able to buy easily.”

He recalls that, unlike in the 2008/2009 crisis, where central banks “had very big hands and started brutal buying programmes, cutting interest rates to low levels”, while governments adopted more restrictive, “almost as if it was an austerity cult”, Now the roles have been reversed.

He does not hesitate to recognize that “inflation has become a very big problem and the ends justify the means”, hence the understanding of the rate hike by the European Central Bank at the upcoming meeting on September 8th.

As a solution, Ricardo Evangelista admits that all governments are “compelled to adopt a more generous attitude towards citizens and above all to avoid austerity scenarios that would further exacerbate this crisis.” But he leaves a guarantee: “I don’t like being in the shoes of people who have to make these decisions.”

Everything indicates that the European Central Bank (ECB) will raise interest rates again at the next meeting. After rising more than expected in July…

The trend is increasing and the expectation at the moment is that a rate hike will be announced on the 8th of September.

So, is this new rise inevitable?

I think so. The question is no longer whether or not interest rates will rise. How much will you rise? I can give you a forecast, which I think will go up by 0.50%. Until recently, the general expectation was for the increase to remain at 25 basis points, or 0.25%, but since then several members of the European Central Bank have spoken publicly, even last weekend, during the Jackson Hole Symposium, in the US. The countries, where everyone has indicated that the ECB is really determined to control the rise in consumer prices, to control inflation. That expectation of a 25 basis point increase, at the moment, has already been removed and everything is pointing to a 50 basis point increase scenario, and even this week, there was already talk that it could reach 75 basis point. , i.e. approximately 1%. If this more aggressive scenario happens, I think the consequences for the Portuguese market will be felt, especially with regards to the Euribor price hike. In other words, mortgage payments will surely rise, consumer credit will become more expensive and this may have a domino effect on the economy, leading to increased unemployment due to lower investment in businesses. It could also cause a crisis for many businesses that would suffer, as a result of less economic activity on the part of families. In other words, families will have to start saving more because mortgage payments are rising, credit becomes more expensive, and things that are sometimes bought that are a little extravagant will not be able to be bought so easily. All this has an impact on economic activity. However, everything will depend on the degree of interest rate hike that is announced on the eighth. If it’s 25 basis points, I think the impact is going to be a bit watered down, but if it’s more than that, everything says it’s going to be at least 50 basis points, then yes, we’ll have this scenario that you described, in which life becomes more More costly and more complex for families which subsequently will also have consequences for businesses.

Families and businesses will have to foot the bill…

Clear.