Lagarde to Leave ECB on Feb. 7, Nine Months Before Her Term Ends

European Central Bank President Christine Lagarde will resign effective Feb. 7, 2027, the ECB announced Thursday, Oct. 29. Her term was due to run until the end of October 2027.

The ECB said Lagarde informed the Governing Council and European Council President António Costa of her decision. The bank gave no reason for the early exit.

The Governing Council gave her a long standing ovation, the ECB's statement said. "It has been a source of great pride to serve this institution," Lagarde said. "I thank all of those who have supported me on this journey over the past seven years."

Succession starts now

Costa said the process to appoint her successor will start today and proceed "without delay." He credited her with "steady and determined stewardship, helping to safeguard stability and the resilience of the euro area."

The European Council makes the appointment. Under EU rules, the president is chosen by qualified majority vote after a recommendation from EU finance ministers and consultations with the European Parliament and the ECB's Governing Council.

The former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernández de Cos, are seen as frontrunners, according to Reuters. No government has formally nominated anyone.

The timing leaves EU leaders room to pick a successor before France's presidential election in 2027. Polls show far-right candidate Marine Le Pen as the favorite there, per Reuters.

What comes next for Lagarde

Lagarde took office in November 2019. She is a former French finance minister and former managing director of the International Monetary Fund. She steered the ECB through the Covid-19 pandemic, the war in Ukraine and a run of energy price shocks that pushed euro area inflation above 11%.

Speculation about an early departure had been building for months. The Financial Times has reported she is a top candidate to chair the World Economic Forum. Neither Lagarde nor the ECB has confirmed any next role. In recent interviews, she has suggested she does not plan to run for the French presidency.

A bad moment for a handover

The ECB is in the middle of a rate-hiking cycle. Policymakers are trying to keep an oil price shock tied to the Iran war from feeding into wages and other prices. Euro zone inflation hit a three-year high in September.

Government bond yields have also surged, especially in debt-heavy France. That has pushed up borrowing costs for households and businesses. Lagarde has said it will curb growth and inflation.

The ECB is widely expected to hold its deposit rate at 2.5% in a decision due at 1315 GMT today. Markets also expect the bank to signal that another increase, possibly as soon as December, remains likely. Lagarde's regular press conference follows at 1345 GMT. The decision has not been announced yet.

More vacancies on the way

Lagarde is not the only senior departure. Chief economist Philip Lane and executive board member Isabel Schnabel are also due to step down next year. ECB leadership is in talks on filling those posts.

That means the bank could have a new president, a new chief economist and a new board member in place while it is still fighting an energy-driven inflation surge and a bond market squeeze in its second-largest economy.

The next concrete step is the European Council's appointment process, which Costa said starts today. Lagarde's press conference this afternoon is her first chance to answer questions on why she is leaving now.