ECB’s Nagel: Inflation Will Return to 2% Even If It Dips Below in Part of 2026

5 November 2025

By Marta Vilar – PARIS (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Wednesday that inflation would return to the ECB’s 2% target even if it falls below that level temporarily next year.

In a panel discussion at the Monetary Policy Conference in Paris, organized by the Banque de France and the Deutsche Bundesbank, which he heads, Nagel noted that inflation had declined significantly and was now “close to our target.”

Bringing inflation down to current levels was “good news per se,” he said, though he warned that the ECB must remain “vigilant” amid persistent uncertainty.

“[W]e should be vigilant, not complacent, and I believe that we will get to our target over the medium term” if the ECB sticks to its data-dependent, meeting-by-meeting approach, he said.

Asked whether the ECB risked reverting to its previous “close but below 2%” framework given potential undershoots across the projection horizon, Nagel replied that inflation was “pretty close to our target” and would return to 2%, despite being below that level for part of 2026.

“We are keeping all the optionalities and we will decide again when we are coming together,” he said.

He also cautioned that some financial assets appeared “overpriced” and stressed the need for the ECB to stay alert to potential risks to financial stability.