ECB’s Nagel: PMI Numbers ‘Not a Surprise’, Confirm Germany’s Stagnation

22 November 2024

By Marta Vilar – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Friday that the latest PMI data were not surprising and confirmed the sluggish situation of the German economy.

In an on-stage conversation at the European Banking Congress in Frankfurt, Nagel, who heads the German Bundesbank, said that ‘these PMI numbers were not a surprise to me, they were confirming the picture that German economy is stagnating this year. The start of next year will be complicated for sure.’

The ECB would probably deliver more rate cuts in the next few months, he said. However, he reiterated that he was not willing to speculate further.

‘We are on the right track, we will bring back inflation to our target and will reach target by mid-next year’, he added.

The new Trump administration would not simplify the ECB’s job and the situation in the US should be taken into consideration by the central bank, according to Nagel.

‘We have to analyse what might be the spillovers of a possible tariff policy, what does that mean in terms of inflation, what does that do with the exchange rate’, he said.

The ECB should stick to its current meeting-by-meeting approach and should examine new data and developments, he said.

‘There is a good probability that we will be confronted with things usually we don’t like to see, us central bankers’, he stated, after reiterating that until the Trump administration took office in January ‘we will be speculating a lot’.

Asked if Trump’s tariff policy would have an inflationary effect, Nagel said that it would depend on how much tariffs were hiked and the movement of the exchange rate.

‘We will do what is necessary to fulfil our mandate, that is the most important message here’, he said.