Member of the European Central Bank (ECB) Governing Council and Deutsche Bundesbank President Joachim Nagel said on Tuesday that the German economy can expect a "slight economic recovery" over the course of the year but that there is currently "no meaningful upswing in sight," warning that he cannot rule out another year without growth. He listed several factors weighing the economy down, including the German industry's struggle to adapt to changing conditions, weak private consumption and political uncertainty.
Nagel noted the Bundesbank expects German inflation will continue to fall, achieving a sustainable return to the 2% target in 2026. Turning to the ECB's monetary policy, he cautioned that euro area inflation could be pushed higher due to potential tariffs or a further depreciation of the euro, arguing that the ECB should "take one step at a time" and that it should not "rush into further interest rate cuts."
