Lagarde to Quit as ECB President in March

Christine Lagarde will step down as president of the European Central Bank in March, nine months before her term was due to end in October next year. She said she wants to speak her mind about world affairs and confront the "misrepresentation of the truth".

She made the announcement at the end of a press conference on the ECB's decision to hold interest rates. The key deposit rate stays at 2.5%, even though inflation climbed to 3.8% last month, its highest since September 2023.

Lagarde said the neutrality rules of her job stop her from joining debates beyond monetary policy. "I want to have the freedom of speech, the freedom of expression and the freedom to engage on matters that are not monetary policy matters," she said. "We have an obligation of neutrality; we comment on the situation with the focus on monetary policy." She called that "the price we pay for being independent".

She did not elaborate on what she meant by damaged truth. "I'm interested in the truth, and I see the truth being very often damaged, contradicted by misrepresentation," she said. She added that there are "things that I can say - whether people will listen or not is another story", but she cannot say them in her current position.

The search for a successor

"A process has already started to identify my successor," Lagarde said, adding there were "plenty of excellent candidates". Names mentioned as possible candidates include former Dutch central bank president Klaas Knot, Spanish banker Pablo Hernández de Cos, German central bank president Joachim Nagel and Nadia Calviño, the president of the European Investment Bank. The European Council, made up of EU heads of state, appoints the ECB head.

Lagarde has been tipped as a possible candidate to run the World Economic Forum, whose founder Klaus Schwab stepped down last year after accusations of financial and ethical misconduct, which he denies.

There has been speculation that French president Emmanuel Macron encouraged her to leave early so a successor can be named before a far-right or far-left candidate could win the Élysée Palace. Holger Schmieding, chief economist at Berenberg bank, said the EU is trying to guard itself against the risk that Marine Le Pen may win the French presidential election in April or May 2027. Macron said the succession must be prepared in an "orderly and balanced way" and thanked Lagarde for her work.

Lagarde joined the ECB in late 2019. In her video message she wore two plasters on her face, which she attributed to "a small surgery earlier in the week".

Source: The Guardian