ECB’s Nagel: “Our Monetary Policy Stance Is the Right Way Forward”

8 October 2025

ECB’s Nagel: “Our Monetary Policy Stance Is the Right Way Forward”
Joachim Nagel, president of the Deutsche Bundesbank, at the Euro20+ Town Hall in Frankfurt on November 30, 2023. Photo by Felix Schmitt/ECB under CC BY-NC-ND 2.0.

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel said that with inflation near the ECB’s target and expected to remain there, the current level of interest rates was appropriate.

Speaking in an interview with Greek newspaper Kathimerini, Nagel, who heads the Deutsche Bundesbank, said, “Based on the information currently available to us, I can affirm that our monetary policy stance is the right way forward.” He declined to speculate about future rate moves.

Inflation in the euro area was “close to our medium-term target of 2% and expected to remain there over the next years,” he said, calling this “a great accomplishment” after inflation had exceeded 10% three years ago.

Nagel linked much of the recent moderation in price pressures to falling energy costs and called for stronger European cooperation to improve resilience. “I strongly support the European endeavor of a joint energy market,” he said, noting that this would strengthen ties between member states and reduce costs for industry.

Turning to Germany, Nagel said public investment would start lifting output next year but that lasting gains depended on reforms. “I have no doubt that public investments in infrastructure and defense will begin to impact GDP from next year onward,” he said. “The crucial question, however, is whether these investments will spur growth in the long run. For this to happen, Germany also needs structural reforms.”

“Less red tape and faster, lean administrative processes are crucial for the political agenda in Germany,” he said, citing the need to expand labor supply, ease regulation and support a more dynamic corporate sector.

Nagel said forecasters “foresee a solid growth rate in Germany from next year on,” but warned that “[t]he Bundesbank estimates potential growth at 0.4% for the coming years… That worries me.”

Nagel agreed with Bank of Greece Governor Yannis Stournaras that Europe could become a safe haven for investors, saying the euro area had proven its stability but should deepen financial integration through the planned savings and investments union.

He praised Greece’s economic recovery as “impressive,” adding that it could serve as an example for other euro area countries, including Germany.