German Bundesbank President Joachim Nagel told a press conference in Bangkok, held alongside the IMF and World Bank annual meetings, that the European Central Bank (ECB) must respond to the euro‑area inflation surge with both flexibility and a steady hand. He said the ECB Council will take all necessary steps to bring inflation back to its 2.0% target over the medium term.
Nagel noted that the ECB has already raised its policy rate twice this year and that, if the situation remains unchanged, a further increase cannot be ruled out. He highlighted the "very volatile market environment" and stressed that decisions should be made session by session, drawing on experience and "large flexibility" to address inflation.
The ECB lifted its key interest rate to 2.50% in September, aiming to curb price pressures sparked by an oil price shock. Euro‑area inflation reached 3.8% last month, the highest level in three years, driven largely by energy costs that rose 18.8% year‑on‑year.
ECB projections indicate that overall inflation will stay well above the 2.0% goal until at least the first half of 2027. Market participants expect the central bank to hold rates steady at its upcoming end‑of‑month meeting and to implement another hike in December, which would mark the third increase under President Christine Lagarde, whose mandate runs until October 2027.
Separately, Reuters reported that the World Economic Forum may appoint Lagarde as its new chair next month, which would require her to leave the ECB prematurely and trigger a broader leadership reshuffle. Finance Minister Lars Klingbeil, speaking in Bangkok, declined to comment on personnel speculation but affirmed Germany's intention to put forward a strong candidate for the ECB directorate. He referenced the upcoming deadline of 28 October for euro‑zone finance ministers to propose candidates to replace departing German director Isabel Schnabel, who will leave early in 2027 for the IMF.
Klingbeil also noted that the ECB's chief economist position will become vacant when Philip Lane's term ends on 31 May 2027, suggesting a possible package solution for the top posts. He said the German government is currently discussing which roles it will pursue and will decide in the coming days. "Germany is a key player in the ECB and will present a strong candidacy to shape its future," he added.
