Christine Lagarde to step down as ECB president on 7 February, successor process launched

The ECB said in a statement that Lagarde informed the Governing Council and European Council President António Costa of her decision, with the Governing Council giving her a "long standing ovation." No official reason was given, but an official familiar with Lagarde's thinking told Politico Europe she wanted "greater freedom to express her views and to engage in non-monetary matters, because she cannot remain neutral when she sees the developments taking place in her own country and in the world."

The timing allows EU leaders to choose a successor before next spring's French presidential election, where opinion polls show far-right candidate Marine Le Pen leading. Lagarde has ruled out standing for the presidency, telling French newspaper La Croix that it would "not be a good idea." She has said she would advocate for pro-European values "in whichever capacity" she deemed most efficient.

Costa thanked Lagarde for her "dedication as President of the European Central Bank since November 2019," adding that "to ensure a smooth transition to the next leadership of the ECB, the process for the appointment of her successor will be initiated today and will proceed without delay." German Finance Minister Lars Klingbeil praised her for leading the bank "through difficult times" including the pandemic, the war in Ukraine and the economic shocks of the Iran war. Eurogroup President Kyriakos Pierrakakis promised a "swift" recommendation to heads of government.

But the early departure drew criticism. "This is debasing the institution and just following the purely political calculus of the French president," said Paul De Grauwe, professor at the London School of Economics. Holger Schmieding of Berenberg Bank said the EU was "trying to guard at least somewhat against the risk that right-wing Marine Le Pen may win."

Lagarde, 70, took office in November 2019 as the first ECB chief with no formal economics training or central banking experience, after leading the International Monetary Fund and serving as French finance minister. Her tenure included the pandemic, two energy shocks and the worst inflation spike in the euro zone's history. Willem Buiter, an economist, said "her seven years at the ECB have been, on the whole, pretty good," noting it brought inflation down faster than in Britain and the US.

Former Dutch central bank chief Klaas Knot and Spain's Pablo Hernández de Cos, head of the Bank for International Settlements, are seen as frontrunners to replace her. The departure also opens negotiations over at least two other ECB Executive Board roles: Isabel Schnabel is due to leave in January for a senior IMF role, and chief economist Philip Lane's mandate ends in May.

The ECB is widely expected to keep its deposit rate at 2.5% later Thursday, with Lagarde due to face reporters after the decision. Speculation mounted that she may become chair of the World Economic Forum, with Reuters reporting it could be announced as early as this month.