In the current conjuncture, external effects are exerting a dominant influence on interest rates in the eurozone and Portugal. The article explains that for a long time there was a global savings glut, mainly of Chinese origin, which depressed interest rates to values close to zero, and that central banks only responded to movements in the real economy.
Regarding short-term nominal interest rates, these are dominated by the recent and expected evolution of inflation, with the predominant effect resulting from the rise in energy prices triggered by the US attack on Iran since 28 February. The author argues that ECB decisions and Euribor rates will continue to be dominated by US actions in the Middle East until a lasting ceasefire is achieved.
With regard to long-term interest rates, the article identifies the main factors as fiscal irresponsibility in the USA, with the expectation that high deficits and rising public debt will continue, as well as Japan's shift, which has started investing more domestically with rates at 30-year highs, being less available for eurozone markets. France is also mentioned for its political quagmire, heading towards presidential elections without candidates defending budgetary control.
The article concludes that Portugal faces these challenges in a relatively favourable position, thanks to the work of reducing public debt carried out by successive governments, although it will inevitably suffer the negative effects of the external influences described.
