Overview
- The ECB said Thursday that Christine Lagarde will resign and leave office on 7 February 2027, months before her term was due to end in October 2027.
- European Council President António Costa said the formal appointment process will start immediately and names such as Klaas Knot and Pablo Hernández de Cos are being widely discussed as frontrunners.
- The move comes while the ECB is in an active rate‑hiking cycle, with the bank expected to hold its deposit rate at 2.5% for now and markets pricing a further increase as soon as December if inflation pressures persist.
- Renewed energy price pressure linked to the Iran shock and a sharp rise in government bond yields, especially in France, have pushed up borrowing costs and raised questions about whether the ECB will use tools such as the never‑used Transmission Protection Instrument to calm specific markets.
- Lagarde leaves a mixed legacy: she unified the bank and led a major strategy review and the creation of the TPI, but she faced criticism for being slow to raise rates during the post‑pandemic inflation surge and has been tipped by some media to take a role at the World Economic Forum.