Lagarde brushes off exit gossip as ECB raises rates
ECB president has floated early ECB departure to play a role in the French presidential campaign.
European Central Bank President Christine Lagarde downplayed rumors of her premature departure as the ECB increased interest rates. "When there is something to report about me personally, you’ll be the first one to know after my grandchildren, and there is nothing to report," she stated at a press conference following the decision to raise the key deposit rate to 2.5%.
Speculation about Lagarde stepping down before her term ends in October 2027 has persisted since June 2025, with ties to the World Economic Forum chairmanship and an early ECB exit to participate in the French presidential campaign being floated. Despite refusing to rule out an early exit, she has said she will remain at least until the year's end.
The ECB increased its key deposit rate for the second time this year due to energy prices driven by Middle East tensions, which are keeping inflation above the 2% target through 2028. Inflation reached 3.3% in August, with oil prices surpassing $100 a barrel. The ECB staff raised their inflation forecasts for 2027 and 2028, slightly above the 2% target.
Lagarde opened the door to further rate hikes but provided no guidance on the future path, as policymakers grapple with persistent inflation and the economic impact of the war. Eurozone growth forecasts for 2026 and 2027 were lifted to 0.9% and 1.4%, respectively. While further hikes could tighten financial conditions and harm growth, the deteriorating inflation outlook and uncertainty about the Bank's leadership may push for a more aggressive stance.
Fellow board member Isabel Schnabel is also rumored to be considering an early exit, suggesting a tougher stance.
Written by urgent.news from Politico EU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
