ECB chief Christine Lagarde to step down nine months early

Frankfurt — Christine Lagarde will resign as president of the European Central Bank on February 7, nine months before her eight-year term was due to end on October 31, 2027, the ECB said on Thursday. The early departure lets European Union leaders choose her successor while France's pro-EU president, Emmanuel Macron, remains in office — and before a presidential election in which polls show the far-right candidate Marine Le Pen favoured to win.

The announcement was not a surprise. There had been months of speculation that Lagarde, a former head of the International Monetary Fund and a former French finance minister, would leave early so that the choice of her replacement would not fall to a possible Le Pen presidency. "That she leaves early is no surprise and does not change the outlook for ECB policies," Holger Schmieding, chief economist at Berenberg bank, told The Hindu.

One source told the South China Morning Post that Lagarde resigned so she could weigh in on political matters in her native France and globally — something the ECB's strict political neutrality has long precluded.

She leaves at an awkward moment for the institution. The ECB is contending with inflation risks from an Iran war-driven oil shock, while a sharp rise in government bond yields, especially in France, threatens to dampen growth, The Japan Times reported.

The vacancy also arrives as part of a wider clear-out at the top of the bank. Chief economist Philip Lane's term ends on May 31, and executive board member Isabel Schnabel is resigning at the end of the year to move to the IMF. EU leaders are expected to settle all three posts in a single package deal of political bargaining among member states.

European Council President Antonio Costa said the selection process "will be initiated today and will proceed without delay." Schmieding said the leading candidates for Lagarde's job appeared to be Klaas Knot, the former head of the Dutch central bank, and Pablo Hernandez de Cos, general manager of the Bank for International Settlements.

The next date to watch is the EU summit on December 17-18, before which leaders are expected to try to agree on all three appointments. France's presidential election follows in April-May 2027.