The labour market has always operated efficiently, top priority being to reduce unemployment. 4,5 Inflation is expected to fall to xx by the end of current year due to a decrease in consumption, in its turn a consequence of unemployment, high though decreasing interest rates and the decrease in the domestic price of utilities.
Real rates are still too high.
This has helped to control inflation by keeping private consumption low. The decrease in the long bond yield makes this investment no longer interesting for private savers who shifted their investments to the Equity market. The Lisbon Stock Exchange market cap grew considerably in the last 2 years due to the combined effect of new admissions of privatised companies and price growth. The historic performance and the growth perspectives led Morgan Stanley to include it in the MS European Equity as from the beguining of 98. The Escudo has been in the EMS since its inception.