Lagarde reportedly eyeing early ECB exit to secure successor before French elections

Christine Lagarde is poised to step down as President of the European Central Bank ahead of schedule, according to a source familiar with the matter cited by the Financial Times.

Lagarde allegedly intends to vacate her Frankfurt seat before the French elections in April 2027, months prior to the official expiry of her eight-year mandate in October of that year.

The decision could be driven by political timing.

By stepping aside early, Lagarde would allow outgoing French President Emmanuel Macron and German Chancellor Friedrich Merz to oversee the appointment of her successor, giving the current leadership of Europe’s top two economies the chance to shape the future of the European monetary policy.

With Macron constitutionally barred from running for a third term, fears are mounting in Brussels and Paris regarding the rise of the far-right Rassemblement National (RN) and the Alternative for Germany (AfD).

Marine Le Pen and her protégé Jordan Bardella are currently polling strongly, raising the prospect of a Eurosceptic administration taking power in Paris. This scenario could potentially paralyze the appointment process for key EU institutions.

Last week, the Governor of the Bank of France, François Villeroy de Galhau, also unexpectedly announced his early resignation, reportedly for similar reasons.

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According to the FT and other reports, the ECB has officially dismissed the claims, stating that Lagarde remains “totally focused on her mission”, but speculation over her replacement is likely to heat up among European economists.

Current sentiment, as gauged by an FT poll in December, suggests that Klaas Knot, the former Dutch central bank chief, and Pablo Hernández de Cos, the former Governor of the Bank of Spain, are the most probable successors to Christine Lagarde.

Knot is increasingly viewed as the “Goldilocks” candidate: a seasoned veteran who has transitioned from a strict inflation hawk to a more moderate, consensus-building figure.

He is particularly attractive to Berlin, as German Chancellor Friedrich Merz may prefer backing a like-minded Dutchman over the political complexity of appointing a German.

Meanwhile, de Cos, who currently leads the Bank for International Settlements, remains a top-tier contender due to his reputation as a “fantastic team player” and his deep technical expertise.