“Stability is the Bundesbank’s mission and its core,” Bundesbank President Joachim Nagel emphasised in his inaugural speech at the change of office ceremony in Frankfurt am Main. “The German public expect, and rightly so, that the Bundesbank will make its voice heard as an advocate for a culture of stability. I can reassure them that it will continue to do so,” he said. “We will contribute our expertise and our convictions to the discourse with confidence.”

Stability not at odds with change

In the words of the Bundesbank President, stability is not at odds with change or a forward-looking approach. The economy and society, he reasoned, have to be built on stable and reliable foundations if they are to successfully evolve. The changes brought about by digitalisation and the restructuring of the economy in response to climate change are also having an impact on the Bundesbank’s tasks. Like his predecessors before him, now it is he who must build on the tried and tested culture of stability to find contemporary answers of his own, Dr Nagel explained. “The Bundesbank should be a modern, efficient institution that rises to the challenges that change brings and harnesses the opportunities it offers.”

Gratitude for Weidmann’s service

Dr Nagel thanked his predecessor, Jens Weidmann, for the service he rendered to the Bundesbank, acknowledging the backbone Dr Weidmann showed in arduous discussions and the great esteem he enjoyed both within and outside the Bundesbank. Bundesbank Vice-President Claudia Buch also thanked Dr Weidmann on behalf of the entire Executive Board for leaving the house in good order.

Jens Weidmann himself wished the Bank’s staff continued steadfastness, good fortune and joy as they go about their work. “Remain an audible voice of reason in the public conversation. And preserve the Bundesbank’s stability policy heritage – that which makes the institution so unique.” Dr Weidmann told his successor that he possessed all the skills needed at the helm of the Bundesbank. “You are, without doubt, the right person to take on the challenges facing the President of the Bundesbank,” Dr Weidmann said.

Federal Finance Minister Christian Lindner was also confident that the Federal Government had made the right choice by nominating Joachim Nagel. “Based on your career path, Professor Nagel, I am convinced that you stand for monetary policy continuity at the Bundesbank.” The decision in favour of Joachim Nagel, Mr Lindner announced, is a good signal, and a correct and important one, to the German public, and beyond that, to the European Union.

Nagel: Inflation rate could remain elevated for longer

Commenting on the steep rise in inflation in the past months, Dr Nagel said that the high rates are partly attributable to one-off effects, but there are other reasons as well. Furthermore, the medium-term outlook for prices is exceptionally uncertain at present. While prices might also rise by less than projected in the forecasts, “right now I see more of a risk that the inflation rate could remain elevated for longer than expected at the current time. In any case, monetary policymakers must be on the alert.” One thing, he continued, is quite clear through all the uncertainty: the ECB Governing Council must act and adapt its monetary policy stance where doing so is needed to safeguard price stability.

ECB President Christine Lagarde was another speaker at the change of office ceremony, and she also used her speech to discuss current inflation developments. The ECB, she said, understands that rising prices are a concern for many people and takes that concern very seriously. “But people can trust that our commitment to price stability is unwavering, which is critical for the firm anchoring of inflation expectations and for confidence in the currency. The whole Governing Council is united in pursuit of this goal.”

Bundesbank’s independence emphasised

Federal Finance Minister Christian Lindner used his remarks to emphasise how important it is that the German central bank is independent. He noted that many people are concerned with inflation developments these days. The Bundesbank, the guardian of price stability, played a part in Germany’s economic ascent. “I hope the Bundesbank will continue to speak out clearly and independently and contribute its expertise,” Mr Lindner said.