Lagarde abruptly resigns as ECB president ahead of French election

【Financial News, New York = Lee Byung-chul, correspondent】 European Central Bank (ECB) President Christine Lagarde has abruptly announced her resignation, with about eight months remaining in her term. The move is seen as clearing the way for the current European Union (EU) leadership to appoint the next ECB president as the possibility of far-right forces coming to power in next year’s French presidential election grows.
According to CNBC and other outlets, Lagarde announced her resignation in a video posted on social media on the 29th (local time). Her official departure date is February 7 next year. Her term had originally been due to run through the end of October 2027.
Lagarde said, “I leave behind an ECB that is ready for the future, with pride in having done my job well.”
Analysts say the French presidential election is behind the resignation. Recent polls have shown far-right politician Marine Le Pen with a strong chance of victory, increasing the need for EU leaders to appoint the next ECB president before the election.
Lagarde’s resignation gives the current EU leadership time to complete the appointment of her successor without being affected by the outcome of the French presidential election.
There is also speculation that Lagarde, who served as France’s finance minister and head of the International Monetary Fund (IMF), resigned to resume political activity. A source familiar with the matter told Reuters that Lagarde resigned to make her voice heard on political issues in France and internationally. Lagarde has ruled out the possibility of running in the French presidential election, but has said she intends to champion pro-European values in whatever role she takes on.
However, the timing of a central bank president’s resignation has also sparked controversy because it coincides with the political calendar.
Markus Ferber, a German member of the European Parliament (EP), criticized the move in comments to foreign media, saying, “Given high inflation, unsettled bond markets and an approaching election, this early resignation sends the wrong signal.” He added, “If the timing gives the impression that it was aligned with an election in a particular country, it will undermine confidence in the ECB, which must transcend political calculations.”
By contrast, Marcel Fratzscher, president of the German Institute for Economic Research (DIW), said, “By stepping down early, Lagarde has given governments across Europe the opportunity to appoint a successor who will defend European values and protect the ECB’s independence.”
The process of selecting a successor is also getting underway in earnest. European Council President António Costa said he would immediately launch the procedure to appoint the next ECB president.
Leading candidates reportedly include former Dutch central bank governor Klaas Knot and former Bank of Spain governor Pablo Hernández de Cos. With the selection of successors also in the works for ECB Executive Board member Isabel Schnabel, who steps down next January, and Chief Economist Philip Lane, whose term ends in May, the ECB leadership is expected to undergo a major overhaul.
The challenge is the economic environment facing the ECB when Lagarde leaves. The war with Iran has sent global oil prices soaring, putting renewed upward pressure on inflation in Europe. The ECB is maintaining its rate-hiking stance to prevent rising energy prices from feeding through to the prices of goods and services and to wage increases.
Meanwhile, government bond yields across Europe, particularly in France, have surged, raising borrowing costs for households and businesses. There are concerns that rising bond yields could increase the fiscal burden and hamper economic growth, especially in France, which has a high level of national debt.
The ECB is expected to hold its deposit rate at 2.5% per year at its monetary policy meeting today. However, markets see a strong likelihood of another rate hike as early as December.



[email protected] Lee Byung-chul, correspondent Reporter