European Central Bank President Christine Lagarde will step down on 7 February 2027, the bank announced on Thursday 29 October, nearly nine months before her eight-year term was due to end in late October 2027. The ECB said Lagarde had informed its Governing Council and European Council President António Costa of her decision. It gave no reason for the departure, saying the council had thanked her warmly and given her a long standing ovation.

Lagarde confirms early departure

Costa thanked Lagarde for her service and said the process to appoint her successor would begin the same day and proceed without delay. He credited her with steady stewardship through the pandemic, the war in Ukraine, energy crises and inflation shocks. Reuters reported that the former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernandez de Cos, are seen as frontrunners to replace her. Lagarde took office in November 2019 after serving as French finance minister and managing director of the International Monetary Fund.

Succession race opens at once

The announcement came hours before the ECB's latest interest-rate decision, which was widely expected to leave the deposit rate at 2.5%. The bank has raised rates twice since June and is expected to consider further tightening to stop an oil-price shock linked to the Iran war feeding into other prices and wages, while also facing a surge in government bond yields, especially in France, that Lagarde has said will curb growth and inflation. Speculation about an early departure had mounted for months, with Reuters reporting the World Economic Forum was seen as a likely destination. An early exit lets EU leaders pick a successor well before France's presidential election next spring, a vote opinion polls suggest far-right candidate Marine Le Pen is favourite to win.

A difficult moment for the bank

Sources: Reuters, European Council statement.