Eurozone inflation is expected to return to the European Central Bank’s (ECB) 2% target by the end of 2025, according to Joachim Nagel, a member of the ECB’s Governing Council and president of the Bundesbank.
“We will achieve price stability this year,” Nagel told the BBC in an interview. “We are back to our target at the end of this year — this is good news.”
The ECB had previously projected inflation reaching its 2% goal by early 2026, but recent declines in energy prices have contributed to an earlier-than-expected return to stability.
Economic Outlook: Europe’s Investment Push
As European countries plan to increase military and infrastructure spending, Nagel expressed optimism about the economic opportunities such investments could create.
“Now is this window of opportunity to do more in Europe,” he said. “We should have more Europe and not less Europe,” emphasizing that such spending should extend beyond just defense.
Germany Faces Risks from US Tariffs
Nagel also highlighted the significant risks posed by President Donald Trump’s trade tariffs, particularly for Germany, which relies heavily on exports.
“When you are exposed to an export-oriented model, then you are more exposed in a situation when tariffs are going up and there are so many uncertainties, so many unknowns,” Nagel warned.
He further cautioned that rising trade barriers could lead to an economic downturn in Germany and possibly trigger a recession later this year.
Outlook: Balancing Growth with Trade Uncertainty
While Europe’s efforts to bolster infrastructure and military capabilities present growth opportunities, the looming impact of US tariffs on the region’s largest economy remains a key concern.
