Vítor Constâncio, Former Vice President of European Central Bank (ECB) on Inflation, Interest Rates, and The Global Banking System

Vítor Constâncio witnessed firsthand severe recessions, inflationary bouts, and a global financial crisis, as former Vice President of the European Central Bank (ECB) (2010 to 2018) and Governor of The Bank of Portugal (1985-1986, 2000-2010). He brings this considerable experience to examine the current challenges facing central bankers at the ECB as well as the Fed.

Constâncio argues that while U.S. inflation is driven by a strong demand generated by loose fiscal policy, the primary agent of European inflation was the surge in energy prices in 2022. However, he recognizes that what began as supply-side pressure has broadened out to other sectors of the Euro area economy, so the ECB’s hiking of interest rates to 4% was necessary. Constancio expects that a mild recession in Europe will tame inflation and that substantial further rate hikes from the ECB will likely not be needed. Filmed on July 6, 2023.


Follow Vítor Constâncio on Twitter https://twitter.com/VMRConstancio

Follow Jack Farley on Twitter https://twitter.com/JackFarley96

Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidance

Follow Blockworks on Twitter https://twitter.com/Blockworks_


Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:


Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/


Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:


Market commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research "Daily Debrief" Newsletter: https://rb.gy/feusos



(00:00) Introduction

(00:48) Euro Area Inflation Is Mostly Due To Energy Shock, Not Demand

(08:13) I Would Support A Pause In Interest Rate Hikes, Says Constancio

(10:11) Recession In Europe Is Likely For 2023

(14:35) ECB Unlikely To Cut Interest Rates During A Mild Recession

(16:20) There Pressure on The European Central Bank (ECB) To Follow The Federal Reserve?

(20:44) Exploring The Logic Of Negative Interest Rates

(25:29) Interest Rates' Impact On The Economy

(32:04) Fixed vs. Floating Mortgages

(34:48) ECB's Reaction Function During The 2008 Great Financial Crisis

(44:16) Recent Bank Failures (Silicon Valley Bank)

(49:51) Credit Suisse

(51:51) Basel III Regulation of Held-To-Matuity Accounts and Interest Rate Hedging

(54:47) Fighting Inflation In 1970s Portugal


Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Other Podcasts from our Network