Monday, 17 August 2026Europe · Analysis
Independent · Brussels & Berlin
Person
President of the Deutsche Bundesbank, Deutsche Bundesbank
Renewed US-Iran strikes over the Strait of Hormuz have pushed Brent crude above $85 a barrel, scrambling market expectations for the ECB's July 22 meeting and reviving fears of a second inflation spike.
Markets price a June hike but policymakers insist on meeting-by-meeting approach with Strait of Hormuz blockade creating 'layer cake of shocks' risk
Brussels meeting exposes deep divisions over joint debt and capital markets union while the dollar still dominates 60 percent of global goods invoicing.
Joachim Nagel argues Europe needs a permanent joint borrowing instrument to finance defence and technology, putting the Bundesbank at odds with Chancellor Merz and marking a historic shift for Germany's central bank.
With Christine Lagarde due to step down in 2027, Madrid and Berlin, the eurozone's fourth and largest economies, are quietly manoeuvring for the first time to lead the central bank, while a Dutch dark horse lurks.
Benchmark rate falls to 2.25 percent, its lowest since November 2022, as Trump tariffs force policymakers to prioritise growth over lingering price pressures.
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