ECB’s Wunsch Says ECB Policy Appropriate, Does Not Rule Out Next Move Being a Hike

29 December 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Pierre Wunsch on Monday said the ECB’s current interest rate stance was appropriate and did not exclude that the next move could be a hike as Eurozone inflation nears 2%.

Wunsch, who heads the National Bank of Belgium, responded affirmatively when asked by Belgian business and finance weekly magazine Trends whether inflation would be a boring issue in 2026.

“Yes, and that's good news,” he said in the interview, which was originally released on 19 December and updated today. “Inflation in the Eurozone is approaching 2%. [Executive Board member] Isabel Schnabel says the next step is an interest rate hike. That's a possibility. We'll see. Today's interest rate policy is appropriate.”

Asked about a possible move to the ECB, Wunsch ruled out interest in an Executive Board position in Frankfurt, citing satisfaction with his current role, which runs through 2028.

On economic developments, Wunsch said growth in Belgium, Europe, and the United States had been better than feared, adding that Belgium was currently growing around potential despite recent shocks.

Structural changes in the labor market were damping the cycle, with unemployment moving little in downturns and hiring constraints limiting stronger upswings, he said.

The central bank expected stable Belgian growth of around 1% or slightly more in 2026, he said, adding that Belgian growth would likely be below the European average because of budgetary measures.

Turning to Germany, Wunsch said the country was “not a locomotive today,” describing an economy that was sluggish and likely to accelerate only gradually.

More expansive German fiscal policy could provide a small boost in 2026 and especially in 2027, he said, but from what he described as a structurally weak starting point.

Wunsch argued that Europe could no longer rely on its previous approach to industrial policy in a world in which the US pursued more aggressive trade policies and China an increasingly assertive industrial strategy.

Strengthening Europe’s strategic autonomy would require an industrial policy, potentially involving subsidies or a more protectionist trade stance in sectors where Europe was no longer competitive, he said.