Key members of the ECB’s governing board see sticky inflation but a clear path for rates

European Central Bank Governing Council member Joachim Nagel said that while inflation will remain sticky, the current path for interest rates remains clear.

Speaking to CNBC’s Karen Tso at the IMF and World Bank annual meetings in Washington on Wednesday, the president of the Deutsche Bundesbank said: “I don’t see any reason to change anything if there’s not something new coming, and I don’t see where it can come from.”

In an exclusive interview, Nagel said global tariff tensions had created a “lose-lose situation for everyone,” but cited the recent strength of the German economy in particular for offering optimism in Europe.

German economic institutes recently revised their growth forecasts for 2025, while Goldman Sachs predicts the economy will continue to grow by 1.4% in 2026 and 1.8% in 2027.

Nagel singled out private credit as an area of ​​concern, saying the size of the market and the “spillover of less regulated market participants” was something regulators should monitor closely.

In a separate exclusive interview, ECB Governing Council member François Villeroy de Galhau said he recommends “nimble pragmatism” regarding the interest rate path, adding: “We are in a good position… but a good position is not a fixed position.”

Diverging from the views of his ECB colleague Nagel, the head of the French central bank suggested that the next rate move was more likely to be a rate cut than a rate hike.

This comes as he welcomed some political clarity in France, as newly reinstated Prime Minister Sébastien Lecornu suspended the controversial pension plan which sat at the heart of France’s political stalemate. Villeroy said lawmakers must now face fiscal uncertainty.

Investors reacted positively to this week’s political events.