Bundesbank chief sees potential for stronger German growth

The head of Germany's Bundesbank said on Friday that the country's economic growth could strengthen over the coming years and did not rule out further interest rate hikes to curb inflation.

Speaking on the sidelines of the International Monetary Fund's (IMF) annual meeting in Bangkok, Bundesbank President Joachim Nagel said the European Central Bank (ECB) governing council would do whatever was necessary to bring inflation back to its 2% target in the medium term.

Nagel noted that the ECB had raised its key interest rates twice recently and said further hikes could be needed if conditions remained unchanged.

Given the highly volatile market environment, Nagel said the ECB was right to decide on interest rates from meeting to meeting, based on the latest available data.

According to forecasts, 2026 is likely to be the sixth consecutive year in which inflation in Germany exceeds 2%. With prices also rising in other major eurozone economies, including France and Spain, economists expect the ECB to raise interest rates for a third time this year.

Inflation in the eurozone rose to 3.8% in September.

Nagel also welcomed the IMF's decision to raise its growth forecast for Germany to 1.3% in 2026, rejecting suggestions that the improvement would be short-lived.

He said the initial positive effects seen this year could continue into 2027 and possibly even 2028.

Combined with the implementation of the German government's reform package and a boost from artificial intelligence, this could generate further economic momentum, Nagel said. He added that Germany's growth figures still had the potential to improve further.