ECB President Lagarde to step down Feb. 7, 2027, nine months early, hours before rate decision

The European Central Bank said on Thursday, October 29, that President Christine Lagarde will step down on February 7, 2027. Her eight-year term, which began in November 2019, was due to run until the end of October 2027, so she is leaving about nine months early. The ECB said she informed the Governing Council and European Council President Antonio Costa of her decision.

Why now: The ECB gave no reason. Talk of an early exit has circulated since February, with the World Economic Forum seen as a likely next role. The timing gives EU leaders room to choose a successor before France’s 2027 presidential election, where polls favor the euro-skeptic far right. That makes a deal between Paris and Berlin under President Macron more likely.

Who could replace her: The European Council appoints the ECB president by qualified majority. Former Dutch central bank chief Klaas Knot and former Bank of Spain governor Pablo Hernandez de Cos are seen as the frontrunners.

What comes next today: The ECB announces its rate decision at 9:15 a.m. ET, followed by Lagarde’s press conference at 9:45 a.m. ET. Markets expect the deposit rate to stay at 2.5%, with a signal that another hike, possibly in December, remains on the table as the bank fights an oil-driven inflation shock linked to the Iran war. Government bond yields across the euro area, especially in France, have risen sharply.

What to watch: How Lagarde explains her exit at the press conference, the reaction in EUR/USD and Bund and French OAT yields, and the timeline for EU leaders to name a successor. A leadership handover in the middle of a hiking cycle could add uncertainty to the ECB’s rate path, which matters for the dollar and for U.S. Treasury yields.