Lagarde announces an early exit on the day the ECB keeps rates on hold
The deposit rate stays at 2.5 percent, but a December hike is on the table; the search for a successor starts at once.
The European Central Bank left its interest rates unchanged on Thursday. The deposit rate stays at 2.50 percent and the main refinancing rate at 2.65 percent, Trends reports, citing news agency ABM. According to Business AM the decision was unanimous, but a hike was seriously considered because of rising energy costs and climbing yields on long-term government bonds. De Tijd quotes Lagarde as saying the inflation risk grows the longer oil prices stay high. A rate rise in December remains very likely, according to Business AM.
The bigger news was Lagarde's own departure. She will step down on 7 February 2027, roughly nine months before her term ends in October 2027. She wants to regain the freedom to speak her mind, she said in Frankfurt, HLN reports. Business AM writes that she has come to see the neutrality required of a central banker as too great a constraint. European Council President António Costa is launching the appointment procedure straight away, La Libre writes. The paper points out that a February exit gives French President Emmanuel Macron a chance to help shape the succession ahead of France's 2027 presidential election.
Possible successors include Dutchman Klaas Knot, former head of De Nederlandsche Bank, and Spaniard Pablo Hernández de Cos, according to Business AM; Nadia Calviño and Joachim Nagel are also mentioned. Dutch Prime Minister Rob Jetten backs Knot. Earlier this year, La Libre looked at whether Pierre Wunsch, governor of the National Bank of Belgium, could also be a contender. Observers give Lagarde's record a moderately positive verdict, De Tijd writes, although she responded too late to the inflation surge of 2021 and 2022. Knack writes that a thankless task awaits her successor.