Spain is disobeying the ECB. Should Portugal?

**TL;DR:** Spain has proven that the ECB will not punish a member state for disobeying their rules. Portugal should follow their example and stop abandoning their own economy to the hands of the ECB.<br><br>---<br><br>**The ECB is broken**<br><br>The European Central Bank (ECB) is a supranational institution that acts as the central bank for the Eurozone. Their main goal is to keep inflation low, and today that is precisely what they did. The ECB raised interest rates in the Eurozone by 0.25%, reaching 4.25%. The reason for this was that inflation in the Eurozone is still above the 2% target. <br><br>However, there is a significant problem with this approach. Not all Eurozone countries have the same inflation rate. Portugal, Spain and Italy have inflation rates that are now decreasing towards the 2% target, while countries like Latvia, Estonia or Slovakia have significantly higher inflation rates. Portugal, for example, stands at 0.8% while Latvia is at 10.5%. The ECB cannot set monetary policy for all the Eurozone, so they have to set it for the entire block, instead of for each country individually. The problem is that they chose to set this monetary policy for the countries with the highest inflation rates, abandoning countries with low inflation.<br><br>**Spain’s disobedience**<br><br>On Wednesday, the Spanish government approved a plan to freeze electricity prices for a year for the roughly 10% of the population that has variable-price contracts. This is not the first time Spain did this, with a similar measure being taken in 2023. The ECB did not punish Spain for these actions, and they have not punished them again, as the economy of the Eurozone as a whole is strong enough. <br><br>Spain disobeyed the ECB by taking actions they saw as best for their economy. Spain proved that the ECB will not punish a member state if the entire Eurozone is performing strongly even if a country disobeys them.<br><br>**Should Portugal disobey the ECB?**<br><br>Portugal should disobey the ECB and set its own monetary policy. Portugal has the political capital to challenge the ECB, as the ECB cannot punish a Eurozone country when the Eurozone as a whole is performing well. The Portuguese economy is being held back by the ECB, as it is currently at 3.5% inflation and performing well. The ECB should target a monetary policy for Portugal and not for the Latvia or Slovakia.<br><br>Portugal should take actions to counteract the ECB’s decisions, such as Spain did, and target a monetary policy that is best for Portugal’s economy. <br><br>#edit: Portugal **should not** disobey the ECB when it comes to monetary policy, since Portugal does not control monetary policy for its own economy. However, the Portuguese government can and should disobey the ECB on fiscal policy, since the Portuguese government does control fiscal policy for Portugal. Disobeying the ECB on monetary policy is not the right course of action since Portugal does not control monetary policy for its own economy. Disobeying the ECB on monetary policy should and probably will result in Portugal leaving the Euro.