ECB’s Nagel Flags 2025 German Stagnation, Says Further Rate Cuts Unlikely

European Central Bank Governing Council member Joachim Nagel said Germany’s economy is likely to stagnate or shrink modestly in 2025, though he sees a “high probability” that growth will return the following year. Speaking in a televised interview, the Bundesbank president also warned that the euro-area’s largest economy faces a brief “micro-recession.” Nagel signalled that further policy easing is unlikely, arguing there are “not many arguments” for lowering rates again and that the threshold for additional cuts is “very high.” With inflation pressures receding, he added, price stability is “not the point anymore,” but he stressed the importance of protecting the ECB’s independence as it navigates a weak outlook. Separate analysis from UBS Global Wealth Management underscored the downbeat mood, projecting that listed Eurozone companies will post a 3 percent decline in earnings in 2025, a reversal from its previous forecast of flat profits. The twin warnings highlight the challenges confronting the currency bloc as it emerges from the post-pandemic tightening cycle.