Bundesbank sees chances for longer growth

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Bangkok. Bundesbank President Joachim Nagel showed cautious optimism on the sidelines of the International Monetary Fund (IMF) annual meeting: Germany could find its way out of the long period of economic weakness — and the upswing could last longer than recently hoped.

At the same time, Nagel did not rule out that the European Central Bank (ECB) may need to intervene again to bring the recently risen inflation under control. He sent both signals — hope for growth and a warning on inflation — on Thursday (October 16, 2026) from Bangkok, where central bankers, finance ministers and economists from around the world are gathering.

For you, this means: If Nagel's assessment holds, the upswing could indeed be more than a short flicker. But if inflation remains stubborn, the ECB will keep a firmer grip — that very tension between the economy and inflation is the core message from Bangkok.

Why Nagel doesn't consider the upswing a flash in the pan

The image of a "flash in the pan" — that is, a brief flare-up that quickly fizzles out — is aimed at widespread skepticism. After several years of virtually no growth, weak industrial production and subdued investment willingness, more recent data point to a slight recovery, according to consistent reports. Nagel reads this as an indication that the trough may have been passed. The statement carries particular weight because it comes from a central banker known for sober risk analysis.

How big is the inflation risk still?

Despite the growth hopes, inflation remains the decisive disruptive factor. Inflation rates in Germany and the eurozone have recently been creeping back up. In Bangkok, Nagel made clear that the ECB Council would "do whatever is necessary" to ensure that inflation returns to the two-percent target in the medium term. That is the official ECB formula — and it expressly includes interest rate hikes, should they become necessary.

The Council of the European Central Bank will do whatever is necessary to ensure that it returns to the two-percent target in the medium term.

What this means for you

The statements from Bangkok are not a concrete growth forecast, but a cautious assessment. For consumers and businesses, this means: the probability is rising that the economy in 2026/27 will not just remain a flash in the pan. That would have tangible consequences — more security in the labor market, less pressure on the public budget, and a bit more room for maneuver on wages and investments.

At the same time, everything hinges on the inflation path. If inflation unexpectedly continues to climb, the ECB would have to counter — and that is precisely what Nagel did not rule out. The next interest rate meetings thus become the litmus test: If the central bank manages to keep cutting rates without inflation rising again, that would be the clearest evidence that Nagel is right with his growth assessment.

The original report with further background can be found at Handelsblatt and Zeit. Further reports on the IMF meeting are running, among others, at Tagesspiegel, Stern and Rhein-Zeitung.