Quantitative Easing

What we know about the new Bundesbank President Nagel

Joachim Nagel was confirmed by the German cabinet today as the choice to lead the Bundesbank, succeeding Jens Weidmann.

The position is known for its hawkishness and Nagel will undoubtedly take the reins on that front, but this time around he will have fundamental support with prices rising in Europe and much of the world. The latest ECB projections pushed inflation up in 2022 by 1.5 percentage points to 3.2%. This will give the hawks something real to scream at.

A clue on his trends comes from a 2015 FT interview in which he lamented QE.

Shortly after the ECB launched its quantitative easing policy of buying large amounts of government bonds in 2015, Nagel warned in an interview with German newspaper Börsen-Zeitung of the “main danger From an “interweaving of monetary policy and fiscal policy.” Echoing the concerns often expressed by Weidmann during his decade as head of the Bundesbank, Nagel said: “There is a risk that the fiscal consolidation required in some euro area countries will be put on hold,” which, according to him, “could then increase political pressure. to the ECB council to postpone an interest rate hike which is necessary from a monetary policy point of view ”.

What else do we know about him?

Adam Tooze is now taking a look at his background including his PhD where he wrote on Ronald Reagan’s economic policy on the supply side and he had that point to take away.

“After going through the doctorate, two things stand out. not a highly technical exercise, plus a narrative treatment of the 1980s US economic policy scene. He concludes that the Reagan administration failed to significantly lower marginal tax rates (the state-level increase offsets federal cuts). But, rather than rejecting measures on the supply side outright, Nagel concludes by arguing for a reconciliation between macroeconomic policy on the demand side and policy on the supply side. Above all, it calls for policy coordination. “

Digging through his CV, he left the Bundesbank in 2016 after losing the race for the post of deputy to Claudia Buch and joined KfW, the German public development bank where he was chairman of the supervisory board of KfW Ipex- Bank.

What happened there could have been the end of his career as the bank loaned Wirecard over 100 million euros which was almost all lost in its scandal and collapse. However, there hasn’t been any real political calculation from Wirecard and somehow he’s at the top of the pile here.

He has been widely cited as an excellent communicator and at 55 he will be a favorite to succeed Christine Lagarde when the time comes.


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