ECB’s Nagel: ‘We Have Now Made Great Progress on the Road to Price Stability’

10 March 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Monday that the ECB had covered considerable ground in its effort to restore price stability.

In a speech at the Berlin School of Economics, Nagel, who heads the Deutsche Bundesbank, said that the ECB had ‘now made great progress on the road to price stability.’

He deemed the ECB’s interest rate cut last week ‘appropriate’.

Speaking about economic policy measures for more growth in Germany, Nagel observed that the country’s potential growth, now at 0.4% on an annual basis, is one percentage lower than in the last decade.

On defense spending and Germany’s easing of the debt brake, he said that ‘extraordinary times require extraordinary measures.’

Increasing the borrowing limit would not by itself reverse Germany’s weak economic path, he said.

‘The causes are complex and deep-seated’, he said. ‘They therefore require a bundle of measures - including many in which financing is not even the main focus.’

Nagel proposed 12 measures that the German government should implement to boost structural growth.

Germany needed more workers and a new structure of the energy sector to be ‘climate- and economy-friendly’, and should increase company dynamics, he said.

Increasing debt would only deliver a ‘temporary solution’, he said.

‘After that, sustainable financing must be provided through the budget’, he said. ‘Because more debt also means rising interest burdens and less budgetary flexibility in the future.’