Joachim Nagel, Germany’s central bank governor and ECB member, shares his latest thoughts on inflation and the possibility of rate hikes in the euro zone.
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European Central Bank Governing Council member Joachim Nagel said that while inflation will remain sticky, the current path for interest rates remains clear.
Speaking to CNBC’s Karen Tso at the IMF and World Bank annual meetings in Washington on Wednesday, the Deutsche Bundesbank president said: “I do not see any reason to change anything if there is not something new coming, and I do not see where it might come from.”
In an exclusive interview, Nagel said global tariff tensions had created a “lose-lose situation for everyone,” but he cited the recent strength of the German economy in particular for providing optimism in Europe.
German economic institutes have recently revised up their growth forcasts for 2025, while Goldman Sachs predicts the economy will continue to expand 1.4% in 2026 and 1.8% in 2027.
Nagel flagged private credit as an area of concern, saying the size of the market and “spillover from less regulated market participants” was something regulators would need to monitor closely.
In a separate exclusive interview, ECB Governing Council member François Villeroy de Galhau said he recommended “agile pragmatism” when it comes to the path for interest rates, adding: “We are in a good position … but a good position is not a fixed position.”
Diverging from the views of his ECB colleague Nagel, France’s central bank chief suggested that the next rate move was more likely to be a rate cut than a rate hike.
This comes as he welcomed some political clarity in France, as newly reinstated Prime Minsiter Sébastien Lecornu suspended the controversial pension plan that has sat at the heart of France’s political deadlock. Villeroy said that lawmakers now need to tackle the fiscal uncertainty.
Investors have reacted positively to this week’s political developments.