Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

New German government picks Joachim Nagel as next Bundesbank chief

EconomyDec 20, 2021 09:16AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Joachim Nagel, Member of the Board of Germany's Bundesbank, attends the yearly news conference in Frankfurt, March 12, 2015. REUTERS/Ralph Orlowski/File Photo

FRANKFURT (Reuters) -Germany's new government has picked Joachim Nagel, a career central banker with ties to the ruling Social Democratic party, as the next Bundesbank chief, Finance Minister Christian Lindner said on Monday.

Nagel, a former Bundesbank board member, will take over on Jan. 1 from Jens Weidmann, who quit five years early after a decade of fruitless opposition to the European Central Bank's aggressive stimulus policy of sub-zero interest rates and massive purchases of government bonds.

The 55-year old economist will take charge of the euro zone's biggest national central bank at a tense moment. Inflation is more than twice the ECB 2% target, and opposing camps within the ECB's Governing Council have distinctly different views on its likely evolution.

"In view of inflation risks, the importance of a stability-oriented monetary policy is growing," Lindner said on Twitter (NYSE:TWTR). "Nagel is an experienced person, who ensures continuity at the Bundesbank."

Weidmann unsuccessfully opposed the ECB's decision in his last meeting on Thursday to extend stimulus and warned that inflation could exceed the ECB's benign projections.

A former board member of the state-owned development bank KfW Bank, Nagel currently works for the Bank for International Settlements, which is often considered the central bank of central banks.

Early in his career, he was also a consultant for the SPD, the party that took over government earlier this month and will make the Bundesbank appointment one of its first decisions.

Although he has not publicly expressed views on monetary policy for years, speeches he gave as a Bundesbank board member show he adhered to the German central bank's tough stance on inflation and emphasis on market discipline for banks and governments.

"Nagel can be trusted to continue the German Bundesbank tradition in the debates in the ECB," Friedrich Heinemann, an expert at the ZEW economic research institute, said. "He has extensive monetary policy and financial expertise, which is essential for today's complex monetary policy decisions."

Heading the Bundesbank, Nagel would join Isabel Schnabel, who was also thought to be in the race for the Bundesbank job, on the ECB's Governing Council as one of two Germans.

"Congratulations to Joachim #Nagel for being nominated as new President @bundesbank!" Schnabel wrote on Twitter. "There are many important tasks ahead of us."

Marcel Fratzscher, the head of economic research institute DIW Berlin and another possible candidate, said Nagel was "a great and smart economist who will represent Germany well", also thanks to his expertise in "financial markets and financial stability".

Germany has often been at odds with the ECB and the bank has repeatedly come under fire from government officials, the media and academics for policies they claimed helped weaker economies at the expense of ordinary Germans.

Their criticism, however, has often fallen on deaf ears at the ECB's Governing Council, where the majority of policymakers have backed the central bank's aggressive stimulus policy.

"Nagel's appointment does not change the majority structure in the Governing Council," said professor Stefan Kooths of the non-profit Kiel Institute for the World Economy (ifw). "The proponents of the loose monetary policy can therefore look forward to the new Bundesbank leadership in a relaxed manner."

Often in the minority, German policymakers have responded by quitting from the Bundesbank and the ECB board, with nearly half a dozen top officials leaving in just over a decade after unsuccessfully opposing ultra-easy ECB policy.

"Our best guess is that Nagel will largely follow Weidmann in being a flexible and cooperative hawk," JPMorgan (NYSE:JPM) economist Greg Fuzesi said. "Weidmann has certainly been very hawkish, but he has played a constructive role in the ECB’s decisions and has accepted decisions that were taken."

New German government picks Joachim Nagel as next Bundesbank chief
 

Related Articles

Gold slips off 2-week peak as dollar edges higher
Gold slips off 2-week peak as dollar edges higher By Reuters - May 25, 2022 1

By Bharat Gautam (Reuters) - Gold prices dipped slightly on Wednesday, receding from a two-week high hit in the previous session, as the dollar reclaimed some ground but...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email