Christine Lagarde to leave European Central Bank in February, months before her term ends

Christine Lagarde will step down as president of the European Central Bank (ECB) on 7 February 2027, the bank announced on Thursday 29 October, about nine months before her eight-year term was due to end on 31 October 2027¹². Ms Lagarde, 70, was appointed in 2019 as the successor to Mario Draghi and previously headed the International Monetary Fund¹.

Asked why she was leaving, she said she wanted freedom of speech and expression on matters outside monetary policy. “I don’t think that I can be comfortable in that neutrality at the present time,” she said¹. In a video message she said she was leaving “with a sense of good work done and an ECB that is fit for the future”².

Rates unchanged, inflation at 3.8%

The announcement came on the day the ECB left its benchmark interest rate unchanged at 2.5%¹. Annual inflation in the euro area is 3.8%, driven by high oil prices linked to the US-Iran war, according to AP¹. The National reported that the ECB is in a rate-raising cycle to stop the oil-price shock from spreading to other prices and wages, and that it was widely expected to signal another increase, possibly as soon as December². Analysts say the ECB’s policy outlook is unchanged by the announcement¹.

Who replaces her

No successor has been named¹. European Council President Antonio Costa said the selection process “will be initiated today and will proceed without delay”¹. Berenberg’s chief economist, Holger Schmieding, suggested the leading candidates appear to be Klaas Knot, a former head of the Dutch central bank, and Pablo Hernandez de Cos, general manager of the Bank for International Settlements, a view AP flags as analyst speculation¹. The National also names the two as front-runners².

Two other vacancies need filling. Chief economist Philip Lane’s term ends on 31 May, and Isabel Schnabel leaves on 3 January to join the IMF¹. EU leaders are expected to negotiate a package deal covering all three posts, and Mr Schmieding expects them to aim for agreement before a summit on 17-18 December¹.

The French election

The early exit is widely seen as a way to fill the post while the pro-EU French President Emmanuel Macron is still in office¹. The concern, according to AP, is that the far-right candidate Marine Le Pen could win France’s presidential election in April-May 2027 and influence the choice of successor¹. The National says polls show Ms Le Pen favoured to win².

Markus Ferber, a German centre-right member of the European Parliament on the committee that will confirm the successor, said the move sent “the wrong signal” and warned that a departure seemingly timed around national elections damages trust in the institution². Paul De Grauwe, a professor at the London School of Economics, said it debases the institution and follows the French president’s political calculations². The National says no official reason was given beyond her own remarks, and describes talk of a move to the World Economic Forum or into French politics as speculation².