Christine Lagarde will step down as President of the European Central Bank (ECB) on 7 February 2027, leaving before the end of her eight-year term. The bank confirmed her decision on 29 October, after she informed its Governing Council and European Council President António Costa.
Lagarde took office on 1 November 2019 for a non-renewable eight-year mandate, succeeding Mario Draghi. Her term was therefore due to end in October 2027. The announcement brings forward the choice of a new leader for the institution responsible for monetary policy across the euro area.
Why Christine Lagarde is leaving early
Speaking at the ECB’s press conference later on Thursday, Lagarde said she wanted greater freedom to address issues beyond monetary policy, Reuters reported.
“I want to have the freedom of speech, the freedom of expression and the freedom to engage on matters that are not monetary policy matters.”
She linked that decision to the political neutrality required of central bankers, saying she felt she had things to contribute outside her current role. She also sought to reassure markets and staff that the transition would not disrupt the institution’s work.
The ECB kept interest rates unchanged
The departure was announced on the same day that the Governing Council left its three key interest rates unchanged. The deposit facility rate remains at 2.50%, the main refinancing rate at 2.65% and the marginal lending rate at 2.90%.
The bank warned that rising energy prices posed risks of higher inflation and weaker growth. It maintained its 2% medium-term inflation target and said future rate decisions would depend on incoming data, without committing to a particular path.
EU leaders are starting the succession process
Costa said the appointment process would begin immediately to allow a smooth transition. He thanked Lagarde for her leadership through the pandemic, war in Europe, energy crises and inflation shocks.
Under the EU’s appointment procedure, euro area governments propose candidates and the Eurogroup discusses a nominee. The Council of the EU then makes a recommendation, followed by consultation with the European Parliament and the ECB’s Governing Council.
The final appointment belongs to the European Council meeting in its euro area composition, which decides by a reinforced qualified majority. The next President will receive a non-renewable eight-year mandate.
