German cabinet confirms central bank chief choice

FRANKFURT: The German cabinet approved the nomination of career central banker Joachim Nagel as the new head of the Bundesbank on Wednesday, as the EU’s top economy comes under pressure from inflation and Omicron.

In Nagel, Germany has a “noted economist and proven financial markets expert” who will “carry forward the Bundesbank’s stability-oriented legacy”, government spokesman Steffen Hebestreit said.

The initial recommendation was made jointly by new Chancellor Olaf Scholz and the Finance Minister Christian Lindner on Monday.

The nomination is one of the first major personnel decisions made by the new government, a coalition between Scholz’s Social Democrats, the Greens and the liberal FDP.

Nagel will begin his eight-year term at a delicate moment for the economy with inflation soaring and a fifth wave of the coronavirus caused by the more infectious Omicron variant looming round the corner.

In November, consumer prices rose at annual pace of 5.2 per cent, a 29-year high for the country where aversion to inflation runs deep.

The new boss had “just one Herculean task”, according to the Bild daily: “Fight inflation!”

Nagel’s predecessor, Jens Weidmann, had “simply stood by” as the European Central Bank had financed the “kamikaze” spending of southern European countries, it wrote.

As a member of the ECB’s 25-member governing council, Nagel will play a role in deciding monetary policy in the Eurozone.

Weidmann, in line with the conservative view of the Bundesbank, was often a sharp critic of the ECB’s accommodative policy as the currency bloc was wracked by a series of crises.

Nagel will be confirmed in post by President Frank-Walter Steinmeier, before taking over from Weidmann on January 1, 2022.

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