Germany's new government will pick Joachim Nagel, a career banker with ties to the ruling Social Democratic party, as the next Bundesbank chief, the Handelsblatt newspaper and a government source said today.

Nagel, a former Bundesbank board member, will take over on January 1 from Jens Weidmann.

Mr Weidmann has quit five years early after a decade of fruitless opposition to the European Central Bank's aggressive stimulus policy of sub-zero interest rates and massive purchases of government bonds.

The nomination could be formalised later week by Chancellor Olaf Scholz, Handelsblatt added.

The 55-year old economist will take over at a tense moment. Inflation is more than twice the ECB 2% target and opposing camps within the ECB's Governing Council have distinctly different views on its likely evolution.

A former board member of the state-owned development bank KfW Bank, Nagel is currently employed by the Bank for International Settlements.

Although he has not publicly expressed views on monetary policy for years, speeches he gave as a Bundesbank board member between 2010 and 2016 show he adhered to the German central bank's tough stance on inflation and emphasis on market discipline for banks and governments.

Heading the Bundesbank, Nagel would join Isabel Schnabel on the ECB's Governing Council as one of two Germans.