German government chooses Joachim Nagel to head central bank
BERLIN (AP) — The new German government has chosen an experienced central banker and former board member of Germany’s state-owned development bank to head the country’s central bank, the finance minister said Monday.
Joachim Nagel will succeed Jens Weidmann, who announced in October that he would step down at the end of the year after a decade as the Bundesbank’s president, citing personal reasons.
National central bank governors in the 19 countries using the euro have a seat on the European Central Bank’s 25-member governing council that sets monetary policy, along with six executive board members. In that position, Weidmann served as the chief skeptic of expansive economic stimulus policies, saying they took the heat off indebted governments to shape up. But he had only one vote, and stimulus opponents were not able to keep the European bank from expanding its efforts during and after the eurozone’s 2010-2015 debt crisis.
The bank last week decided to gradually withdraw pandemic stimulus by phasing out a 1.85 trillion euro ($2.1 trillion) bond purchase program by the end of March. It cushioned the exit by adding bond purchases to an earlier support program.
The cautious exit means analysts only expect the first interest rate increase in 2023 despite annual inflation at its highest level — 4.9% — since records began in 1997. The European Central Bank faults temporary factors that will eventually fade and says the economy still needs support.
Stefan Kooths, deputy head of the Kiel Institute for the World Economy, said Nagel has “so far supported a stability oriented course in monetary policy” and “if he maintains that, would belong to those in the ECB council who present counterarguments to the current ultra-expansive monetary policy.” That however wouldn’t alter the board’s majority stance, Kooths said.
Nagel is deputy head of banking at the Bank for International Settlements, an international association of central banks. He was appointed to that job in November 2020. He previously served on the Bundesbank’s executive board and on the board of Germany’s state-owned KfW development bank.
Finance Minister Christian Lindner wrote on Twitter that he and Chancellor Olaf Scholz are nominating Nagel as “an experienced personality who assures continuity at the Bundesbank.”
“In view of inflation risks, the significance of stability-oriented monetary policy is growing,” he said.