Christine Lagarde, President of the European Central Bank, is reportedly considering stepping down before the end of her mandate in October 2027. According to a report by the Financial Times, Lagarde may leave ahead of France’s 2027 presidential election to allow outgoing French President Emmanuel Macron to influence the choice of her successor.
Lagarde’s current term runs until October 31, 2027. However, concerns have emerged that a potential shift in French political leadership — including the possibility of a far-right victory — could complicate the selection process for the next head of the euro zone’s top financial institution.
Citing a source familiar with the discussions, the Financial Times said Lagarde has not finalized the timing of any departure. The report suggested she would prefer Macron and German Chancellor Friedrich Merz to play a central role in deciding her successor. Macron is constitutionally barred from seeking a third term.
ECB says no decision taken
An ECB spokesperson stated that Lagarde remains fully focused on her responsibilities and has not made any decision regarding the end of her term. This response marks a shift from previous guidance. Last year, when similar speculation surfaced, the ECB had said Lagarde was determined to complete her mandate.
Financial markets showed little reaction to the report. Bond yields and the euro were broadly unchanged in early trading, suggesting investors do not expect a leadership change to trigger a major shift in ECB monetary policy.
Leadership succession and potential candidates
The report follows closely after Francois Villeroy de Galhau, Governor of the Bank of France, announced he would step down in June — more than a year before his term ends — allowing Macron to appoint a successor before the French presidential election.
Although all 21 euro zone leaders must formally agree on the next ECB president, historical precedent indicates that both German and French backing are crucial for any successful candidate.
Several names have been circulating in ECB circles as potential successors. Among the most frequently mentioned are Klaas Knot, Pablo Hernandez de Cos, and Joachim Nagel. ECB board member Isabel Schnabel has also expressed interest, although EU rules limiting board members to non-renewable terms could complicate her candidacy.
Lagarde herself was not widely considered a frontrunner until shortly before her nomination seven years ago, highlighting the unpredictable nature of the selection process.
ECB policy outlook remains stable
Lagarde’s potential departure would come at a relatively stable moment for the euro area. Inflation is close to target, interest rates are broadly neutral, and economic growth is near potential levels. Most major ECB decisions are made by consensus, meaning a leadership change is unlikely to result in abrupt policy shifts.
Markets currently expect the ECB to keep interest rates steady for the remainder of the year. However, ongoing global uncertainty could still influence the monetary policy outlook.
Before leading the ECB, Lagarde served as Managing Director of the International Monetary Fund from 2011 to 2019 and previously held the role of French finance minister.
