Christine Lagarde announced on Thursday that she would step down as the president of the European Central Bank in February, cutting short a turbulent term that spanned a series of economic crises including the Covid-19 pandemic and two energy shocks.
There had been growing speculation and some intrigue that Ms. Lagarde, 70, would leave the post before the end of her eight-year term in October 2027, which would make way for a transition during a politically sensitive time in Europe.
The president of the central bank, which sets interest rates for the 21 countries that use the euro, is chosen by European political leaders. The possibility of a far-right politician winning the French presidential election next spring had led some analysts to speculate that Ms. Lagarde might leave while President Emmanuel Macron was still in office.
Other observers have said that, in the end, Ms. Lagarde’s successor is likely to be chosen through political compromise that would mitigate the influence of any one country.
Suggestions that Ms. Lagarde would step down early emerged last year when Klaus Schwab, the founder of the World Economic Forum, said Ms. Lagarde had considered leaving the central bank to become head of the forum, which hosts an influential gathering each year in Davos, Switzerland.
Ms. Lagarde’s time at the central bank is the latest step in a career of breaking gender barriers and contending with economic crises. She was the central bank’s first female president and its first leader who was not an economist.
Before the European Central Bank, she led the International Monetary Fund for eight years, where she was also the first woman to be managing director. And before that she was the French finance minister during the global financial crisis, the only woman at the time managing the economy of one of the world’s richest nations. She has jokingly referred to herself as “Mrs. Crisis.” Before entering the French government, Ms. Lagarde worked at the international law firm Baker McKenzie, rising to be its first female leader in 1999.
The central bank’s principal job is to keep inflation low and steady but it also regulates Europe’s largest banks and influences economic policy throughout the region.
Succeeding Mario Draghi as its chief, Ms. Lagarde has been forced to spend her tenure at the bank steering the European economy through a series of crises. She took over in November 2019 and within months was faced with the Covid-19 pandemic. The bank embarked on an enormous bond-buying program to try to support the region’s economy during the period of upheaval.
Then, in 2022, Russia’s full-scale invasion of Ukraine set off a European energy crisis, which sent the cost of natural gas soaring and the eurozone’s inflation rate above 10 percent. Ms. Lagarde oversaw the bank’s exit from negative interest rates and into an aggressive series of rate increases to quell surging price pressures.
Despite some early criticism of her communication style, Ms. Lagarde is generally perceived to have handled these crises well. The central bank lowered interest rates beginning in mid-2024 as inflation in the eurozone slowed and ultimately returned to the bank’s 2 percent target late last year.
Ms. Lagarde began this year saying the bank was in a “good place.” Inflation was close to the target and interest rates were stable. But the U.S.-Israeli war against Iran abruptly disrupted that calm. As energy prices climbed again and pushed inflation back up, the central bank lifted interest rates. It was the first major central bank to do so in response to the war.
The bank’s governing council, which sets interest rates, has 27 members: an executive board plus the governor of each central bank from the 21 euro countries. Governors at the bank have said Ms. Lagarde takes a collegial approach to setting policy, allowing the many voices of the governing council to be heard.
But in some ways, Ms. Lagarde has expanded the traditional remit of the central bank.
Ms. Lagarde pushed the bank to address the financial reverberations of the climate crisis, an initiative that has attracted some criticism. She has been vocal about the economic policies governments in Europe should enact. And she has called on political leaders to rapidly introduce reforms that would make the region’s economy more productive and competitive, including by deepening the integration of member states and taking advantage of the region’s size.
“Europe largely missed out on the first digital revolution,” she said in August. “We cannot afford to repeat that experience with artificial intelligence, the second digital revolution.”
Ms. Lagarde herself added to the speculation of her early departure. She said in an interview with Bloomberg TV this year that she took on the central bank’s top job believing it was for a five-year term, not an eight-year one.
Beyond Ms. Lagarde’s role, the E.C.B. is going through a substantial change in leadership. A new vice president took over earlier this year. And two more members of the six-person executive board will depart next year, including Philip Lane, the bank’s chief economist.
The post Christine Lagarde to Step Down as Chief of European Central Bank appeared first on New York Times.
