Christine Lagarde to leave ECB after turbulent tenure

Christine Lagarde will step down as president of the European Central Bank in February 2027 after a tenure marked by pandemic shocks, record inflation and major changes to the bank's policy tools.

Lagarde, 70, became the first woman to lead the ECB when she was nominated in 2019. She had previously been the first woman to head the International Monetary Fund.

Her supporters describe her as a consensus-builder on the ECB governing council, which sets interest rates for the 21-nation euro area. A council member told AFP that Lagarde “made everyone feel they were part of the same team.”

Her tenure also brought criticism. Early in the coronavirus pandemic, she drew criticism after saying the ECB was “not here to close spreads” between eurozone governments' borrowing costs. The ECB later announced a large pandemic emergency bond-buying programme.

The strongest criticism came after inflation rose above 10 percent in 2022 following the easing of Covid lockdowns and the energy shock linked to the Ukraine war. Andrew Kenningham of Capital Economics told AFP that the ECB was “probably six months slow” to raise rates, while noting other central banks had also moved too slowly.

Once the ECB began tightening policy, it raised its benchmark rate from negative territory in mid-2022 to a record 4 percent in late 2023.

The ECB also changed its framework under Lagarde. In 2021, it completed its first strategy review in two decades. In 2022, it created the Transmission Protection Instrument, which allows the ECB to buy bonds of a eurozone member if yields rise uncontrollably and financial stress risks spreading. The tool has not been used.

Lagarde's period at the ECB also saw discontent among some of the central bank's roughly 5,000 staff in Frankfurt. A 2024 study commissioned by staff representatives found burnout cases were rising, while unions raised concerns about favouritism. The ECB said it took staff health and well-being seriously.