Germany’s Bundesbank President (and European Central Bank Governing Council member) Nagel said the ECB faces a “high bar” for another rate cut, with inflation at target and policy already eased. He expects rates to stay on hold in September, downplaying German weakness while stressing the importance of central bank independence.
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Bundesbank President Joachim Nagel said it would take a major shift in the economic outlook for the European Central Bank to cut rates again. In an interview with Bloomberg TV at the Fed’s Jackson Hole symposium, he said the euro zone is currently in “equilibrium,” with both inflation and policy rates at 2%, and he sees little justification for further easing after eight quarter-point cuts.
Nagel’s remarks reinforce expectations that the Governing Council will hold steady again in September, after leaving rates unchanged in July. He downplayed a sharp drop in German GDP in Q2, noting that while 2025 may mark a third recession in as many years, growth should return in 2026 as public spending rises.
He also stressed the importance of central bank independence, calling it “the DNA of good monetary policy,” as questions grow around political pressure on the U.S. Federal Reserve.