Inflation in Germany weakened significantly in 2024. As measured by the Harmonised Index of Consumer Prices (HICP), the inflation rate fell from an annual average of 6 % in 2023 to 2.5 % in 2024. 

Given the favourable inflation outlook, the Governing Council of the ECB loosened its monetary policy stance. Between June and December 2024, it lowered the deposit facility rate – the rate through which monetary policy is currently steered – by a total of 1 percentage point. Following a further cut in January 2025, the deposit facility rate now stands at 2.75 %.

Germany’s economic output has remained virtually constant for more than two years. After price and calendar adjustment, Germany’s gross domestic product (GDP) fell slightly by 0.2 % last year, following a decline of 0.1 % in 2023.

The Eurosystem’s balance sheet shrank by nearly €500 billion last year. Its targeted longer-term refinancing operations (TLTROs) expired. The Eurosystem gradually phased out its reinvestment under the monetary policy purchase programmes, bringing it to a definitive end at the close of the year. The Eurosystem’s total assets declined by just over a quarter overall from 2022 onwards.

The monetary policy tightening that began in 2022 placed a substantial strain on the Bundesbank’s profitability. For 2024, the Bundesbank is reporting an accumulated loss of €19.2 billion, its first since 1979.

Strategy 2027 is an internal scheme put in place by the Bundesbank to respond to the challenges posed by technological transformation, changes in the wider environment and growing geopolitical tensions. As part of this process, the Bundesbank is also expanding its internal analytical resources with a focus on the needs of the future.