Christine Lagarde, who has headed the European Central Bank for seven years, has announced that she is stepping down prematurely from the position. "European Central Bank President Christine Lagarde today informed the Governing Council and the president of the European Council Antonio Costa that she will step down from her position on 7 February 2027," the ECB said in a statement. European Council President Antonio Costa said a process to find her successor would start immediately.
The announcement comes ahead of a key meeting of the bank this week that is likely to focus on France's deteriorating public finances. No reason has so far been given for Lagarde's premature departure, but there has been speculation that she would leave early to enable EU leaders to choose her successor before French elections that could see a far-right victory and influence the choice. Her term, which began on November 1, 2019, would normally have ended at the end of October 2027.
Lagarde, a former French finance minister, was also head of the International Monetary Fund from 2011 to 2019. Costa praised Lagarde's leadership during her seven-year stint at the ECB helm, a period in which the EU and the world faced great challenges. "Through a global pandemic, a war in Europe, energy crises and inflation shocks, she has provided a steady and determined stewardship, helping to safeguard stability and the resilience of the euro area," Costa posted on social media.
"To ensure a smooth transition to the next leadership of the ECB, the process for the appointment of her successor will be initiated today and will proceed without delay, with a view to a timely decision," Costa said. Lagarde herself has voiced satisfaction with her record. "I leave this institution with a sense of good work done and an ECB that is fit for the future," Lagarde, a French economist, said in a short video shared on social media.
The ECB head is chosen by the leaders of the 21 eurozone countries. The announcement of Lagarde's imminent departure comes as the ECB is to hold a meeting this week where it is expected to keep its deposit rate at 2.5%, while signalling that this is likely to rise again before the end of the year. The bank has already raised interest rates twice since June in a bid to curb inflation fuelled by the energy shock caused by the Iran war.
However, Thursday's meeting is also likely to focus on the fiscal and political crisis in France, Europe's second-biggest economy. French bond yields, which reflect the cost of government borrowing, rose to their highest level in 25 years last week amid a deadlock over next year's budget. Recent protests, at which many demonstrators were calling for more spending on public services, were also marred by considerable violence.
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