Christine Lagarde will end her term as president of the European Central Bank on February 7, 2027. Her term was due to end in late October that year, so her departure will come around nine months early.
The ECB announced the decision on Thursday morning. At a meeting where monetary policy and eurozone interest rates were discussed, the Governing Council thanked Lagarde for her work and sent her off with prolonged applause.
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It has not yet been announced what her next role will be. Her early departure has fueled speculation that she could take the helm of the World Economic Forum (WEF), which organizes the annual gathering of political and economic leaders in Davos, Switzerland.
Klaus Schwab, the forum’s founder, stepped down from its leadership last year following allegations of financial and ethical misconduct, which he has denied.
Lagarde’s decision is expected to accelerate the process of selecting the next ECB president. Those mentioned as candidates include Klaas Knot, former president of the Dutch central bank; Pablo Hernandez de Cos, a Spanish banker and former governor of the Bank of Spain; Joachim Nagel, president of the Bundesbank, Germany’s central bank; and Nadia Calviño, president of the European Investment Bank.
The selection of a new leader comes as the eurozone faces weak economic growth and inflation above the central bank’s target.
Lagarde took the helm of the ECB in late 2019, shortly before the outbreak of the COVID-19 pandemic, which caused major economic shocks in Europe and around the world. During her term, the bank has also faced the economic fallout from the war in Ukraine, developments related to the conflict in Iran, and trade tensions caused by US President Donald Trump’s tariff policies.
The ECB has played a key role in setting monetary policy across the eurozone. Changing interest rates is one of the tools the institution uses to curb inflation and maintain price stability.
The general expectation is that the ECB will leave interest rates unchanged at Thursday’s meeting, but the official decision rests with the Governing Council.
Lagarde’s departure opens an important process for the future of European monetary policy, as the eurozone economy continues to face considerable challenges.
