ECB President Christine Lagarde to Step Down on February 7 as Bank Holds Rates Unchanged
Christine Lagarde will leave the European Central Bank on February 7, 2027, months before her term was due to end, as the bank kept interest rates unchanged and warned that energy costs pose a rising inflation risk.
European Central Bank President Christine Lagarde will step down on February 7, 2027, the bank said on Thursday, ending months of speculation about an early exit.
The ECB said Lagarde told the Governing Council and European Council President Antonio Costa that she will leave the post on that date. Her term was due to run until the end of October 2027.
Succession starts at once
Costa said the process to find a successor will begin immediately. The former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernandez de Cos, are widely seen as frontrunners for the job, according to Reuters.
Financial markets showed little immediate reaction to the announcement, Reuters reported. The euro fell to its lowest since last May, trading about 0.3% lower on the day at around $1.11, while Europe’s broad STOXX 600 index was up 0.95%.
In a short video shared on social media, Lagarde said, “I leave this institution with a sense of good work done and an ECB that is fit for the future.”
A source with direct knowledge of the matter told Reuters that Lagarde had resigned so she could weigh in on political matters in France and globally. As ECB president, she was expected to remain neutral to protect the institution’s independence. Lagarde has said she would not be a candidate for the French presidency but would advocate for pro-European values in her home country.
Reaction was mixed. Markus Ferber, a German member of the European Parliament, said the early resignation sent “the wrong signal” given high inflation, nervous bond markets and looming elections. Marcel Fratzscher, president of the German think tank DIW, said Lagarde was showing “a strong sense of responsibility towards Europe” by leaving early so a successor could be chosen.
Rates held as inflation risks rise
On the same day, the ECB left interest rates unchanged and said inflation risks were on the rise from surging energy costs, Reuters reported. The decision was widely expected, and analysts cited by Reuters said a rate increase in December remains firmly in play.
The ECB is in the middle of a rate-hiking cycle aimed at stopping an oil-price shock linked to the Iran war from feeding into other prices and wages, Reuters reported. At the same time, a sharp rise in government bond yields, especially in France, has pushed up borrowing costs for households and businesses.
The leadership change is part of a wider reshuffle at the bank. Executive board member Isabel Schnabel is due to leave in early January, and chief economist Philip Lane is due to depart in May, according to Reuters.
Reporting based on coverage by Reuters and SRN News.
