Christine Lagarde to step down as ECB chief nine months before end of term

Christine Lagarde, who heads the European Central Bank, has decided to leave her post early. The 70-year-old leader, who previously led the International Monetary Fund for over eight years, will leave the regulator's helm on 7 February 2027, nine months before the end of her contract. The ECB officially announced this.

Reasons for departure and previous decisions

In public comments, Lagarde explained her decision by citing the inability to freely express her position on key global issues. During her tenure at the ECB, she is best remembered for the decision at the start of the pandemic to launch the largest euro issuance in history through the Pandemic Emergency Purchase Programme (PEPP). Although this helped Europe navigate lockdowns relatively smoothly and supported the economy, it laid the groundwork for a serious inflationary threat in the future.

Later, facing a sharp rise in prices following the start of the war in Ukraine and the energy crisis, Lagarde shifted the ECB to a strict policy of rate hikes, which further complicated the situation for the European economy.

Economic context of the resignation

Christine Lagarde is leaving the ECB at a difficult moment for the European Union, characterised by several factors:

• New energy and inflation shock: The escalation of the conflict in the Middle East (between the US and Iran) has led to new records for gas prices since 2022, while current inflation is almost double the ECB's 2% target, standing at 3.8%.
• Political crisis in France: Yields on French government bonds have risen sharply amid public finance problems and the risk of Eurosceptics led by Marine Le Pen coming to power in the 2027 elections.
• Weakness of key EU economies: The largest countries, particularly Germany, are showing low growth rates, while Volkswagen is recording billion-euro losses due to intensified competition from China.

Candidates for replacement

Among the most likely candidates for the ECB presidency are currently former Dutch central bank president Klaas Knot and former Bank of Spain governor Pablo Hernández de Cos. No official nominations have been made yet.