Lagarde May Exit ECB Early to Shape Succession Ahead of French Election, FT Reports

European Central Bank President Christine Lagarde is planning to step down from her role ahead of schedule, potentially before the end of her term in October 2027, in a move that would allow French President Emmanuel Macron to influence the selection of her successor, the Financial Times reported on Wednesday.

According to the report, an early departure would come ahead of France’s next presidential election in spring 2027, a contest that could see a victory for the eurosceptic far right. Such an outcome could complicate the traditionally delicate process of appointing the ECB president, a role that has historically required the backing of Paris. As the euro zone’s second-largest economy, France has long held significant sway in ECB leadership decisions, and no president has been appointed without French approval.

The ECB said in response that Lagarde has not taken any decision regarding an early exit, marking a shift from earlier guidance. Last year, when similar speculation surfaced, the central bank said Lagarde was “determined to complete her term.”

Political Context Raises Stakes Around ECB Leadership

The report comes at a time of heightened sensitivity around central bank independence globally, following repeated public pressure from U.S. President Donald Trump on Federal Reserve Chair Jerome Powell to cut interest rates aggressively.

Citing a person familiar with the matter, the Financial Times said Lagarde has yet to decide on the precise timing of her departure but would prefer that Macron and German Chancellor Friedrich Merz play leading roles in selecting her successor. Macron, however, is constitutionally barred from seeking a third presidential term.

Market reaction to the report was muted, reflecting expectations that none of the leading candidates would dramatically alter the ECB’s policy direction.

Multiple Senior ECB Roles Potentially at Stake

An early exit by Lagarde could also strengthen the case for European leaders to treat several upcoming ECB appointments as a single package. The terms of chief economist Philip Lane and Executive Board member Isabel Schnabel, who oversees market operations, are due to expire next year.

Given that ECB leadership appointments often involve political bargaining, filling all three roles simultaneously could be more efficient—particularly as the euro zone’s largest economies, France, Germany, and Italy, hold de facto permanent representation on the Executive Board.

Names frequently mentioned as potential successors to Lagarde include former Dutch central bank governor Klaas Knot, Bank for International Settlements General Manager Pablo Hernández de Cos, and Bundesbank President Joachim Nagel. Schnabel has also expressed interest in the top job, although EU rules may limit her eligibility, as Executive Board members serve non-renewable terms.

French Central Bank Exit Adds to Political Tension

The Financial Times report follows closely on the heels of an announcement by Bank of France Governor François Villeroy de Galhau that he will step down more than a year before the end of his mandate, enabling Macron to appoint his replacement. That decision drew criticism from the far-right Rassemblement National, which accused the government of positioning allies ahead of a potential change in power.

Villeroy reiterated on Wednesday that his decision was purely personal. Opinion polls suggest that RN leader Marine Le Pen or her protégé Jordan Bardella could win the next presidential election, though the party has struggled to reassure France’s economic establishment amid shifting policy positions.

While the formal choice of ECB president rests with leaders from all 21 euro zone countries—and could, in theory, go against France’s wishes—historical precedent suggests that securing both French and German support is essential to clinch the role. Some analysts caution that attempts to sideline far-right or far-left political forces could also carry unintended consequences.

ECB at a Point of Relative Stability

Lagarde would be stepping down at what many see as a relatively calm phase for euro zone monetary policy. Inflation is close to the ECB’s target, interest rates are broadly neutral, and economic growth is near its potential—a rare alignment often described as an ideal backdrop for central bankers.

Markets currently expect the ECB to keep rates on hold for the remainder of the year. However, officials have repeatedly warned that exceptional global uncertainty means the outlook could shift quickly, regardless of leadership continuity.