Lagarde to step down from ECB early as rates stay unchanged
The European Central Bank announced that President Christine Lagarde will leave early, with around nine months of her term still to run, on the day its Governing Council kept interest rates unchanged.
AI illustrationChristine Lagarde will step down early as President of the European Central Bank, with around nine months of her term still to run, the ECB announced on Thursday 29 October. The same day, the Governing Council decided that the three key ECB interest rates stay unchanged.
Her departure date is reportedly 7 February 2027, and the term she is cutting short was reported to be an eight-year one. According to reports, Lagarde said she wanted to be free to engage in matters outside monetary policy. At the press conference she asked that questions about herself be left to the end, saying monetary policy was the real order of business.
The ECB said energy prices have continued to rise, posing upside risks to the inflation outlook and downside risks to the growth outlook. Inflation rose to 3.8 per cent in September from 3.2 per cent in August, with energy price inflation up to 18.9 per cent from 14.3 per cent. Inflation excluding energy increased to 2.3 per cent from 2.1 per cent. The bank said the increased magnitude and duration of the energy shock, and its indirect and second-round effects, are likely to drive up inflation and lower growth, while underlying inflation has remained broadly stable so far and wages do not show a material response at this stage.
Financing conditions have tightened since the previous meeting, which the ECB said is likely to weigh on inflation and growth. Interest rates have broadly moved up and stock prices have fallen. The rates were reportedly held at 2.5%.
The Governing Council said it will follow a data-dependent and meeting-by-meeting approach and is not pre-committing to a particular rate path. It sees the risks to growth to the downside and the risks to inflation to the upside, citing in particular the Middle East conflict and recent developments in Russia's war against Ukraine. Asked about a possible rate hike in December, Lagarde said the ECB pays very special attention to second-round effects but is not, at this point in time, seeing a risk of such effects beyond what the September projections already include.