ECB’s Nagel: Climate Change Could Impact Inflation ‘In a Very Bad Way’

13 February 2025

By Marta Vilar – GLASGOW, Scotland (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Thursday that climate change could have a very negative inflation effect.

In the Q&A session following his speech at the Adam Smith Business School University of Glasgow, Nagel, who heads the Deutsche Bundesbank, said that climate change ‘could influence inflation in a very bad way.’

Although the battle against climate change could ‘never dominate our mandate’, neither could central banks turn a blind eye to it, he said.

‘I cannot ignore that the world outside is changing’, he said.

Asked about the withdrawal of the US from the Paris climate agreement, Nagel said it was not ‘the best decision’.

‘At the end, it could be a costly decision’, he said. ‘Maybe I am convinced that Europe will not go in the same direction.’

The new US administration was seen as an ‘eye opener’ for Europe, according to the Bundesbank president.

‘It might help us to think about our own situation’, he said.

The current changes in the global landscape were described by Nagel as ‘a tectonic change’.