Once a year, the Bundesbank invites guests from the spheres of politics, academia and society to the Capital City Reception in Berlin to exchange views on the economic situation and current topics. This year's event saw Bundesbank President Joachim Nagel welcome IMF Managing Director Kristalina Georgieva and author Constanze Stelzenmüller as special guests. Both enriched the Capital City Reception by contributing their views on the evening’s topic, The interconnected global economy: between cooperation and confrontation.

In his speech, Bundesbank President Joachim Nagel addressed the need to brace for various scenarios given the current geopolitical uncertainties. Inflation and the euro area economy, for instance, could well follow different trajectories depending on the outcome of the US elections. Donald Trump’s agenda could, for example, lead to a marked decline in growth and entail inflation risks for Europe, said Mr Nagel, adding that, As Germany’s trade links with the United States are closer compared with the rest of the euro area, the negative effects on Germany could be greater than on the euro area as a whole. Mr Nagel stressed the importance of preparing for eventualities. It may be “a restorative process if external challenges enhance our ability and our willingness to take action in Europe,” Mr Nagel noted.

Monetary policy on track

On monetary policy, the Bundesbank President said: We need to remain vigilant to allow the inflation rate to stabilise at 2% over the medium term. Even if inflation rates were likely to tick back up a bit in the coming months, inflation was generally on the retreat, in his view. The ECB Governing Council would maintain its data-dependent approach to the further trajectory of key interest rates.

Importance of Europe’s resilience

Mr Nagel concluded his remarks by highlighting the importance of resilience and international cooperation to make Europe robust to global risks. “Our aim should be to put ourselves in a position where the rain cannot harm Europe – in whatever form it may come,” Mr Nagel said. He sees the overcoming of the energy crisis and the persistently high employment rate as signs of strength.

Constanze Stelzenmüller on international cooperation or confrontation

Following the remarks by Joachim Nagel, Constanze Stelzenmüller, Director of the Center on the United States and Europe, initially spoke on the topic of “The interconnected global economy: between cooperation and confrontation”. She then discussed with Mr Nagel about Germany’s international interconnectedness and the possible impact of the upcoming US elections on Europe.

Dialogue about central bank issues

The Bundesbank’s Capital City Reception aims to further strengthen dialogue about central bank issues and provides a networking opportunity for individuals from the political arena in Berlin. Around 250 guests attended, among them members of the Bundestag’s Finance and Budget Committees as well as representatives of various ministries, academic institutions, and associations.