FRANKFURT (The Thursday Times) — European Central Bank President Christine Lagarde announced her resignation on Thursday, about nine months before her term was due to end, as the bank battles an oil shock from the Iran war and a surge in French borrowing costs.
Lagarde will step down on February 7 next year, giving European Union leaders time to choose a successor well before France’s presidential election, which polls suggest the far-right candidate Marine Le Pen is favoured to win, Reuters reported. Her term had been due to run until the end of October 2027.
“I leave this institution with a sense of good work done and an ECB that is fit for the future,” Lagarde said in a short video on social media. A source with direct knowledge of the matter said she was leaving so she could weigh in on political matters in France and globally, which she could not do while required to stay neutral as ECB president. The World Economic Forum has been widely seen as her likely next destination.
Knot or Hernández de Cos
European Council President António Costa said the search for a successor would begin immediately. The former Dutch and Spanish central bank governors, Klaas Knot and Pablo Hernández de Cos, are seen as frontrunners. Markets barely moved on the news. “Our view is that institutional behaviour is likely to outlast Lagarde, and be quite similar, whoever takes over,” said Simon Dangoor of Goldman Sachs.
Rates rising
The ECB is in the middle of a rate-hiking cycle aimed at stopping the oil shock from the Middle East war feeding into wider prices and wages, and was expected to hold its deposit rate at 2.5% later on Thursday while signalling another rise as soon as December. It also faces a sharp rise in government bond yields, especially in debt-laden France, where the 10-year yield has topped 5%.
