Christine Lagarde will leave her post as president of the European Central Bank (ECB) on February 7, about nine months before her eight-year term was due to end. The early departure sets off a contest to find her replacement at a time of uncertainty for the eurozone.
Lagarde announced the decision on Thursday in a filmed statement posted on X. She said she was leaving with a sense of accomplishment and confidence that the ECB was well prepared for the future.
Timing of the handover ahead of France’s election
The early exit gives European Union leaders time to select a successor before France’s presidential election in April. Polls have suggested that far-right candidate Marine Le Pen is the favourite to win that vote.
The timing could also let current European Council members, including French President Emmanuel Macron, take part in choosing Lagarde’s successor before the French ballot. Macron, who cannot seek re-election, thanked her on X for her decisive leadership during a period marked by many crises. He said the handover should be planned in an orderly and balanced way with European partners.
Not everyone welcomed the timing. Markus Ferber, a German member of the European Parliament, warned that if the departure appeared linked to national elections, it would weaken trust in an institution that must remain above domestic political considerations.
Leaders and officials praise Lagarde’s tenure
German Chancellor Friedrich Merz, whose country is the largest economy in the eurozone, said Lagarde had led the bank with great poise through difficult times. European Union chief Ursula von der Leyen thanked her for her work for Europe and the euro.
French Finance Minister Roland Lescure also praised her record. He said she had modernised and strengthened the institution while Europe moved through crises. Marcel Fratzscher, head of the German Institute for Economic Research, told Reuters that the early exit gives governments a chance to appoint someone who will protect European values and the ECB’s independence.
Financial markets appeared calm. Simon Dangoor, head of fixed income macro investing at Goldman Sachs, told Reuters that institutional behaviour was likely to outlast Lagarde and remain broadly similar under any successor.
Lagarde’s record through crises and criticism
Lagarde was appointed in October 2019 and has guided the bank through the COVID-19 pandemic, Russia’s full-scale invasion of Ukraine and the United States-Israel war on Iran. The ECB had earlier faced criticism for reacting too slowly to the inflation surge of 2022, which was driven by post-pandemic supply chain bottlenecks and the war in Ukraine.
Inflation is currently running at almost twice the bank’s 2 percent target, and worries over France’s public finances have added to the pressure. A former French finance minister and former head of the International Monetary Fund, Lagarde arrived in Frankfurt in 2019 without formal training in economics or central banking. Some market participants warned at the time of a “credibility risk”.
In March 2020, as the pandemic rattled sovereign debt markets, she said the bank was not there to narrow the gap between Italian and German borrowing costs. Sources told AFP that leaving early would give Lagarde greater freedom to share her views. She has also hinted that she could take part in the French presidential race, arguing that a European voice was needed in that debate.
