Bundesbank President Nagel believes the big wave is over

Herr Nagel, ist die schreckliche Inflationswelle endlich vorüber?

Ja, aus meiner Sicht läuft die Inflationswelle aus. Sie war in der ersten Phase sehr herausfordernd, oder wie Sie es sagen: schrecklich. Aber jetzt sind wir im Euroraum auf gutem Wege, dass wir unser Inflationsziel von 2 Prozent nachhaltig erreichen. Das werden wir laut der Eurosystem-Prognose vom Juni Ende 2025 schaffen. In Deutschland trügt die am harmonisierten Verbraucherpreisindex gemessene Inflationsrate von 2 Prozent im August ein wenig, schon aus rein technischen Gründen: Der Vergleich zum Vorjahr – also zum August 2023 – fällt günstiger aus als in anderen Monaten. Es wird demnächst auch wieder etwas höhere Raten geben. Aber ich denke, das Schlimmste haben wir hinter uns. Die große Welle ist überstanden.

Kann es noch passieren, dass die Inflation aus dem Ruder läuft?

Das sehe ich nicht. Wenn es keinen weiteren unerwarteten großen Schock gibt, wie es beispielsweise im Februar 2022 der Angriff Russlands auf die Ukraine war, dann sollte sich die Inflation im Trend weiter auf 2 Prozent zubewegen. Wir dürfen dennoch nicht vorzeitig in Jubel ausbrechen und uns auf die Schulter klopfen. Noch sind wir nicht am Ziel. Wir müssen weiter aufmerksam bleiben und die Risiken auf dem Weg zurück zu stabilen Preisen im Blick behalten, das ist unsere Aufgabe als Zentralbank.

Wie ernst muss man denn die wiederholten Überraschungen nach oben bei der Dienstleistungsinflation nehmen?

Die höheren Preissteigerungen der Dienstleister nehmen wir ernst. Dienstleistungen machen immerhin knapp die Hälfte des Warenkorbs der Verbraucherinnen und Verbraucher aus, das ist viel. In Deutschland steigen die Preise von Dienstleistungen immer noch um etwa 4 Prozent pro Jahr. Dazu tragen insbesondere hohe Lohnzuwächse bei. Und wir erwarten auch im Jahresverlauf 2024 für Deutschland weiter relativ hohe Lohnabschlüsse. Die Tariflöhne dürften auf Jahressicht um rund 6 Prozent steigen. Die monatlichen Werte schwanken zwar, aber insgesamt bleibt der Lohndruck in Deutschland zunächst hoch.

Im EZB-Rat haben wir betont, dass wir uns nicht vorab festlegen und abhängig von den Daten entscheiden. Es war klug, nach der Zinssenkung im Juni dann im Juli erst einmal abzuwarten und die Zinsen nicht weiter zu senken. Deshalb werde ich mich wirklich erst in der EZB-Ratssitzung nächste Woche entscheiden, dann habe ich den kompletten Überblick über alle Daten. Wir sind auch weiterhin nicht mit dem Autopiloten unterwegs. Aber ich sage mal: Ich sehe die Inflation auf gutem Wege.

Bei der ersten Zinssenkung im Juni hatte nur Österreichs Notenbankchef Robert Holzmann gegen den Schritt gestimmt. Immerhin hatte die EZB gerade ihre Inflationsprognosen hochsetzen müssen. Hatten Sie bei der Zinssenkung keine Bedenken?

Nein, ich hatte im Juni keine Bedenken. Für mich haben die Daten einen solchen Zinsschritt gerechtfertigt. Denn sie haben die Gesamtrichtung, also den Rückgang der Inflationsrate über einen längeren Zeitraum, nicht infrage gestellt. Und unsere Geldpolitik ist auch nach der Zinssenkung noch straff. Trotzdem respektiere ich natürlich die Entscheidung des Kollegen Robert Holzmann.

Der Vergleich mit einer ganz anderen Situation ist immer schwer, zudem sollten besser andere meine Arbeit bewerten. Wir entscheiden im EZB-Rat als Team, das eine verantwortungsvolle Geldpolitik für den Euroraum machen will. Ich möchte mit den Kolleginnen und Kollegen im EZB-Rat gemeinsam nach Lösungen suchen und deshalb eher auf das gesamte Team blicken als auf Einzelne. Ich glaube, uns ist da in den vergangenen zwei Jahren eine gute Leistung gelungen: Wir haben es geschafft, die Inflation unter schwierigen Bedingungen zurückzuführen.

There are economists who fear that inflation could settle significantly above the ECB's target of 2 percent in the medium term. In your view, can the risk of structurally higher inflation in the future be completely dismissed?

Two things must be clearly distinguished here. Firstly, there is the question of whether we will have greater price pressure in the future. I cannot rule that out. We are looking closely at how certain developments affect inflation, for example geopolitical developments, the green transformation, demographic developments. Some scientists expect this to put pressure on inflation rates to rise. The question of whether this will lead to higher inflation in the long term is a completely different matter. And here I say quite clearly: monetary policy has a say in this. Our mandate was price stability.

Would you actually say that the ECB is partly to blame for the fact that inflation has gotten so out of control in recent years?

I wouldn't speak of guilt in this context, that's the wrong category for me. We're always wiser in hindsight. What is certainly true is that at the end of 2021 – before I joined the ECB Council – it was already foreseeable that the inflation rate would rise and the ECB continued to buy bonds. In January 2022 – before Russia's attack on Ukraine – we already had an inflation rate of 5 percent, which is probably also due to the corona pandemic. In the ECB strategy review that has just begun, we will have to look at the role played by the monetary policy measures of the low inflation phase, for example the bond purchases.

Was it a sticking point that the ECB had decided to phase out bond purchases first and only then raise interest rates? The economist Markus Brunnermeier said this in a recent discussion with you. This meant that the central bank could not react quickly with interest rate increases when inflation would have required it. . .

It was important at the time to gradually prepare the financial markets for this change. This was done in several announcements in December 2021. If you look at the developments on the financial markets, I would say that the markets understood the communication, they were prepared. The ECB has thus managed to keep the negative side effects that are otherwise often associated with changes in monetary policy relatively manageable.

As President of the Bundesbank, how do you currently view the economic situation in Germany? Is it being spoken of negatively?

We are dealing with an economic situation that is characterized by strong headwinds. Current company reports make it clear that certain sectors are under pressure and need to take countermeasures. But I don't believe in bad-mouthing anything, as that only encourages the very developments that one is actually complaining about.

What do you mean by headwinds?

As a major export economy, Germany is particularly affected by the current geoeconomic changes. For example, we export a lot to China, so any slowdown in economic development there hits us particularly hard. Insurance also plays a role, which we see among consumers and companies. As a result, investments in machinery, equipment and vehicles fell by 4.1 percent between winter and spring. Overall, economic output shrank by 0.1 percent in spring. That should be a wake-up call. We need to take center stage, and to do that, it needs to become more attractive to invest again.

Where could the impetus for more growth come from?

In my opinion, the Federal Government's growth initiative is going in the right direction: reducing the cold tax progression, reducing bureaucracy, better depreciation options for investments, but also measures to strengthen employment incentives. These are all the right steps. But they must now be implemented after the summer break. Words must be followed by actions. It is particularly important that politicians show clearly where things are headed. If there is reliability here, companies will invest more again. And in my view, the debt brake could also be moderately reformed. The Bundesbank has made proposals that would create a little more leeway, as long as Germany complies with the European debt rules. But politicians must now act.

How concerned are you about developments in Thuringia and Saxony?

That moves me a lot. Democracy, freedom, openness to people from other countries, these are core values. If they are called into question, we as the Bundesbank cannot remain indifferent; we must take a clear position on this. A central bank also has a social responsibility in this regard. And we as the Bundesbank have just had renowned historians examine the history of German central banks between 1924 and 1970. I am worried when I read calls for Germany to leave the European Union or the monetary union. Something like that endangers Germany as a business location, it undermines cohesion in Europe. And it damages our prosperity.

The Bundesbank itself is currently undergoing a transformation. The concept for the new headquarters in Frankfurt has been scaled down, there are no new high-rise buildings, and eight of 31 branches are being closed. Where are we now – is there more to come?

That is quite a lot that we have set ourselves. This is about the future viability of the Bundesbank. But it is also about the fact that the Bundesbank is committed to economic efficiency. We have agreed with our employee representatives that employees can work from home for up to 60 percent of the time. This has given us the opportunity to plan our construction projects in Frankfurt on a much smaller scale. We can even do without building new offices altogether. And we will design the future open office landscapes in a way that suits a modern institution. We have to reduce the number of branches because the use of cash is trending downwards. However, the closures will be planned well in advance and designed in a socially acceptable way. And we will ensure that the nationwide supply of cash in Germany is guaranteed at all times in the future.

What will Bundesbank employees actually say if they no longer have their own office in this context in the future?

When employees see their new office landscapes, many will surely say that it is really great. As well as working from home works, we have also learned how important it is to exchange ideas with others. This helps enormously in fulfilling the tasks that the Bundesbank has. And this often works better in an open office landscape than in a quiet room. Of course, there are still opportunities to withdraw if you want to work alone and concentrate.

You have announced that you want to make greater use of AI, for example for inflation forecasts. Have you had any successes yet?

Yes, we are already trying out a few things, for example in the area of ​​short-term inflation forecasting. Especially when it comes to very complex problems, which we at the Bundesbank often have to deal with, AI can give you an initial overview very quickly. We are already using it to prepare for meetings. But what is important to us is that AI must remain an instrument. People are still responsible. We remain in the driver's seat.

The ECB is now discussing its monetary policy strategy again. What would be important to you?

On the one hand, we have to look at the past: what was good about the special monetary policy measures, what was bad? A critical look in the rear-view mirror is important in order to review our use of instruments looking ahead. Are we well positioned? Which issues will be relevant for the future?

Would you also like to discuss the inflation target of 2 percent?

A review of the inflation target is not on our agenda. We have done very well with our inflation target of 2 percent, including recently. I see no reason to change the target in the current situation.

In Germany in particular, there was a lot of debate at the time about the ECB's billion-dollar bond purchases. Central bankers even resigned over the dispute. How do you view this today, after several years of experience and the realization of high operating losses at the Bundesbank?

Of course, I would also prefer to announce profits. We have had them for many years. But now we will have to cope with losses for a few years – and we can do that. A topic that we communicated very early on, by the way. Because if monetary policy buys bonds on a large scale, it is clear that rising interest rates will hit the central bank balance sheet. And that is what happened. We had to raise interest rates sharply. As the largest central bank in the Eurosystem, the Bundesbank has to bear the highest burdens. We may be at a similar level this year as in 2023. Because we have largely used up our risk provisions, we will have to work with loss carryforwards for the next few years. But what is important to me is that the Bundesbank's profits will come back in the future. The Bundesbank's balance sheet is solid. Because we have large valuation reserves. That is why no one needs to worry – the Bundesbank does not need additional capital.

And what are your conclusions for bond purchases? Should the instrument be abolished again?

One should definitely be cautious with extensive bond purchases at the lower limit of interest rates. When it comes to ensuring price stability, it should remain an exceptional instrument for exceptional situations. I hope that such an exceptional situation will not arise again in the foreseeable future. I certainly see no signs of it. The extensive monetary policy bond purchases were associated with numerous side effects on the financial markets. When reviewing the strategy, I advocate a clear order for bond purchases at the lower limit of interest rates. We must not overstretch this instrument.