Brussels (Brussels Morning) The new German government appointed Joachim Nagel as the next Bundesbank chief. The former Bundesbank board member with ties to the ruling Social Democrats (SPD) succeeds Jens Weidman, who resigned unexpectedly in October, more than five years before his term was set to end.
Free Democratic Party’s (FDP) Finance Minister Christian Lindner announced the government’s decision on Monday, bringing an end to the guessing game as to who would become the head of the eurozone’s largest central bank.
Nagel, a 55-year-old economist and career central banker, will be taking over at a delicate moment, when soaring inflation rates are double the 2% set as the eurozone target by the European Central Bank (ECB).
The new head of the German central bank will face dissenting voices on the ECB board about how to manage the rising inflation, and disagreements as to its likely progression. “Nagel is an experienced person, who ensures continuity at the Bundesbank”, Lindner wrote on Twitter on Monday. “In view of inflation risks, the importance of a stability-oriented monetary policy is growing.”
Nagel was previously a board member at the state-owned development lender KfW Bank, and currently works for the Bank for International Settlements in Basel. His ties to the SPD date back to early in his career, when he worked as a consultant for the party.
Germany has a contentious relationship with the ECB, with government officials, media and academics often accusing the European bank of pushing policies beneficial to weaker economies, at the expense of Germany.
A lack of understanding on the ECB’s part led to a wave of public resignations by German officials, both from the Bundesbank and the ECB board, which culminated in the sudden announcement by Weidman of his resignation in October.