Inside the ECB, irritation grows over Lagarde’s handling of exit

FRANKFURT – Confused, irritated, uncertain.

Inside the European Central Bank (ECB), staff are in shock by reports that President Christine Lagarde will quit before her term is up, leaving questions about her authority.

A number of Governing Council members are perplexed by the lack of pushback to the speculation, according to people familiar with the matter.

Ms Lagarde’s response this week was in stark contrast to her firm denial to similar reports in 2025.

Many feel left in the dark about what the 70-year-old Frenchwoman in charge of the institution will do, the people said, asking not to be identified revealing the content of private conversations.

An internal memo to ECB staff seen by Bloomberg offered no more information than what was issued to the media.

There are also worries about threats to the key tenet of central bank independence, particularly if Ms Lagarde is seen to have left for political considerations, some of the people said. 

An ECB spokesperson declined to comment.

The internal frustrations are hitting the ECB at a delicate time.

While policymakers have returned inflation to around their 2 per cent target and say that interest rates are currently in a “good place”, there is no shortage of risks facing the 21-nation euro zone that demand attention – and potentially a quick response.

US President Donald Trump’s anti-Europe stance, reflected in everything from tariffs to defense policy, as well as bloated deficits and a stronger currency, are among the threats hanging over the economy.

All have implications for inflation, which the ECB had to battle hard to get down from a post-Covid high above 10 per cent.

Questions about Ms Lagarde’s commitment to the ECB also jeopardise her authority within the institution after her predecessor Mario Draghi’s divisive leadership.

Mr Matthew Ryan, head of market strategy at financial services firm Ebury, sees limited impact on the euro given the ECB is widely expected to keep policy unchanged for some time, but notes there are still implications.

“The fact that Lagarde has not denied the story says a lot,” he said.

An early leadership change “could erode Lagarde’s authority and credibility during upcoming communications”.

The latest speculation was sparked by the Financial Times

, which said Ms Lagarde has decided to leave early.

The ECB did not directly deny the story, but instead fanned the rumor mill by saying the president has not made any decision on the end of her term, which suggests the topic is being considered.

Ms Lagarde had a subsequent chance to clarify her plans

in a Wall Street Journal interview published later in the week

.

Her comment was that her “baseline” is that her mission will take until the end of her term.

If there is a sense the Frenchwoman is eying the exit, that may undercut her ability to speak for the institution with a strong voice.

It would give some European politicians reason to disregard her repeated criticism of their governments for moving too slowly on reforms to improve capital markets and competitiveness.

In the face of protectionist pressures from the US and the expansion of China’s industrial prowess, European leaders know they must respond, but they are divided on how that should happen.

Political demands

Under Ms Lagarde’s leadership, the ECB has been a loud contributor to the debate, and there is resentment in some capitals about the interference.

Ahead of a meeting of heads of state in February, the institution sent a checklist of demands to them.

Pulling the ECB – which cherishes its independence from politicians – into such discussions is a dangerous gamble.

It can backfire if those targeted consider the institution’s contributions as an invitation to reciprocate.

Even more so if the leader responsible seems in any way compromised.

The backdrop to an early Lagarde exit has a very political element.

It would allow European leaders – especially France’s Emmanuel Macron and Germany’s Friedrich Merz – to choose her successor before French presidential elections in the spring.

That would prevent Ms Marine Le Pen of the National Rally, which may win the election, having sway in the ECB succession,

Ms Le Pen’s protege, Mr Jordan Bardella, has signalled that the party would push the ECB to restart quantitative easing to help with France’s fiscal problems, disregarding rules that prohibit the central bank from directly financing governments.

France’s central-bank chief, Mr Francois Villeroy de Galhau, also announced recently that he would leave his post prematurely.

But in trying to protect the ECB, Ms Lagarde risks harming it. 

“Benefits should be carefully weighed against the risk that an appointment strategy designed to pre‑empt the choice of France’s next president could fuel populist and anti‑establishment sentiment,” said Mr Marco Valli, head of macroeconomic analysis at UniCredit in Milan.

“EU leaders and the ECB must navigate this process with great care.”

This is not the first time that questions about Ms Lagarde’s future have emerged.

In 2025, she was rumored to be considering trading her Frankfurt office for one near Geneva running the World Economic Forum. 

In the WSJ interview, Ms Lagarde said the WEF is “one of the many options” she is considering for after the ECB. BLOOMBERG