Portugal’s governor remains in place ahead of ECB meeting

The Bank of Portugal has said Mário Centeno will continue to serve as governor and will attend the European Central Bank’s governing council meeting this week, even though his official term has come to an end.

According to Reuters, Mário Centeno’s five-year term as governor ended on July 19 before the Portuguese government had reached a decision about whether to reappoint or replace him.

The ECB’s governing council is scheduled to meet on July 23 and announce its monetary policy decision the following day. It appeared likely that the council might have to meet with one of its members absent.

However, the Bank of Portugal tells Central Banking he will be taking part in the governing council meeting. “According to Portuguese law, governor Centeno continues to serve as governor of Banco de Portugal with full legal capacity and institutional representation powers,” a spokesperson says.

Centeno was appointed governor in 2020 after five years as minister of finance. He was affiliated with the country’s socialist party, which is now in opposition. As governor, he consistently favoured looser monetary policy when his counterparts voted to hold, leading him to be characterised as a ‘dove’.

Portugal’s current government, led by Luis Montenegro, is a minority coalition comprising the social democratic party and the CDS-PP, which is often described as a Christian democratic, conservative party. It went into recess on July 17.

Any potential candidates to replace Centeno would face questioning from a parliamentary committee before the government could officially appoint them. The committee could still hold hearings this week, notwithstanding the government’s recess.

The ECB is widely expected to hold rates this week. On July 11, board member Isabel Schnabel said the bar for a further easing was “very high”.

It is rare for the governing council to meet without representation from every Eurosystem central bank. The most recent occasion was last year, when Spain was absent because José Luis Escrivá had yet to be appointed to head the country’s central bank. The Bank of Spain’s acting governor and then-deputy governor Margarita Delgado attended the meeting, but had no voting rights over monetary policy.

Other instances included the absence in 2008 of Central Bank of Ireland governor John Hurley, whose place was taken by acting governor Tony Grimes; the absence of Slovenian governor Mitja Gaspari in 2007, with acting governor Andrej Rant standing in; and Italian governor Antonio Fazio’s absence in early 2006, when acting governor Vicenzo Desario represented the country.

In each of these cases, the replacement representatives did not retain the right to vote on interest rates.