ECB’s Nagel and Villeroy: ‘Victory Against Inflation Is in Sight’

22 November 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council members Joachim Nagel and François Villeroy de Galhau on Friday said that victory in the fight against inflation was in view and called for Germany and France to lead efforts to overcome challenges to Europe.

In a joint declaration posted on the websites of their respective institutions, Nagel, who heads the German Bundesbank, and Villeroy, governor of the Banque de France, said that all Governing Council members treated each other ‘with respect and trust.’

Despite occasional differences of opinion on how to deal with the post-pandemic inflation spike, the Council could always come to a decision, they said.

‘And victory against inflation is in sight’, they said.

Nagel and Villeroy declared themselves ‘united in calling for a revival of joint French-German action’, such cooperation having demonstrated the ability to counter crises.

Joint action was called for to overcome the ‘low-growth, low-productivity and low-innovation path of the last 30 years’, they said, noting that US economic policy would only make like more difficult.

‘[W]e both believe that protectionism is detrimental to price stability and growth – including in the US itself’, they said. ‘We both believe that overly lax fiscal policy could raise long-term interest rates.’

The recommendations of the Draghi and Letta reports should be implemented, they said. As for funding this, ‘we both welcome using the European budget for challenges that should be tackled at the European level’, they said. ‘However, more common European debt is not at this stage a prerequisite to move forward: let us prioritise the many costless and more structural proposals of the reports.’

The two policymakers also called for ‘a much more European approach to defence policies’, which included ‘more joint procurement of armament and, relatedly, a higher common budget for defence.’