Europe’s most powerful central banker is heading for the exit early. On Thursday the Frenchwoman informed her fellow policymakers in Frankfurt that she will hand over the presidency of the European Central Bank on 7 February 2027, roughly nine months before her eight-year term would have run out.
The timing was striking. Lagarde broke the news on the same morning the council gathered in Frankfurt to decide on interest rates for the twenty countries that use the euro. According to the bank, her colleagues responded with a lengthy standing ovation. Speculation about an early departure had been swirling for most of the year; now there is a firm date.
She did not say what comes next. For months her name has circulated as a possible new head of the World Economic Forum, the organisation behind the annual January gathering in Davos, whose founder Klaus Schwab stepped aside last year.
Her announcement immediately set off a succession contest. European Council President António Costa praised what he called her “steady and determined stewardship” and said the search for a successor would begin that very day, with a decision expected from euro-area leaders without delay. Among those tipped for the job are Klaas Knot, who used to run the Dutch central bank, the Spaniard Pablo Hernández de Cos, Germany’s Joachim Nagel and Nadia Calviño, now in charge of the EU’s lending arm, the EIB. Reports earlier this autumn suggested Paris might support Knot in return for a French chief economist.
Lagarde, a former French finance minister and IMF managing director, took over from Mario Draghi in November 2019. Within months Covid had shut down much of the economy. Russia’s full-scale invasion of Ukraine then triggered an energy shock and the steepest inflation in a generation, and more recently the bank has had to navigate the fallout from the Iran war and American tariffs.
Whoever replaces her will inherit a sluggish eurozone in which price growth is still running above the two per cent target, leaving little room for an easy start.
