ECB President Lagarde resigns at time of mounting challenges for Europe

European Central Bank President Christine Lagarde
Photo: Brussels Times

European Central Bank President Christine Lagarde announced her resignation on Thursday, ending months of speculation about her future just as Europe enters a period of rising economic volatility and divisive electoral politics, Reuters reports.

Lagarde will step down on February 7, giving current European Union leaders time to pick a successor well before a French presidential election that polls show far-right candidate Marine Le Pen is favoured to win.

The move comes as the ECB battles inflation risks from an Iran-driven oil shock while a sharp rise in bond yields, especially in France, threatens to dampen growth.

A source with direct knowledge of the matter said Lagarde had resigned so she could weigh in on political matters in her native France and globally. As ECB president, she was expected to remain neutral to safeguard the institution's independence.

European Council President Antonio Costa said in a statement the process to find ⁠a successor for Lagarde would begin immediately. The former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernandez de Cos, are widely seen as frontrunners.

"The rumoured successors are both very competent, well established central bankers, so for markets it won’t matter too much," Piet Haines Christiansen, an economist at Danske Bank, said.

Lagarde's term was scheduled to run until the end of October 2027 but speculation about an early departure had been mounting for months, with the World Economic Forum seen as a likely destination.

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