Lagarde quits European Central Bank ahead of French election

The French head of the European Central Bank (ECB) is to step down from the role, just months ahead of the troubled country's presidential election.

Christine Lagarde, according to a Reuters news agency source, was to leave the Bank as she wanted to add her voice to the nation's bitter political deadlock amid continuing social unrest over the state of public services.

The ECB, which sets monetary policy for the 21-nation euro area, declined to comment on the report.

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Ms Lagarde, a former French finance minister, has been president of the ECB since 2019. It's a role that demands political impartiality.

It was announced that she would leave in February, giving European leaders time to elect a successor nine months earlier than planned as her term had been due to end on 31 October 2027.

She is departing at a time of turmoil for the global economy, with a surge in energy prices linked to both the conflict in the Middle East and Russia-Ukraine war driving up inflation.

At the same time, a minority government in France is trying to settle a contentious budget that demands spending cuts against a backdrop of widespread, violent protests against austerity.

French government borrowing costs recently hit their highest level since 2002 as investors signalled growing unease over the fiscal, political and societal stalemate.

A presidential election is due in April next year, with the far-right candidate Marine Le ​Pen expected to win according to the most recent polling.

Ms Lagarde, sporting bandages on her face which she attributed to a "small surgery", announced her resignation in a video via her X account.

"I leave this institution with a sense of good work done and an ECB that is ​fit for the future," she said.

Lagarde played down talk of a presidential election run last month when she was quoted by the La Croix newspaper as saying: "That would not be a good idea at ​all. First, there's the question of ​vitality, energy, and strength. There's also an unavoidable sense ⁠of sacrifice in this type of commitment. And I'm 70 years ​old."

It was widely expected she would be questioned by reporters on her future intentions at an ECB news conference this afternoon that was set to follow the Bank's latest monetary policy decision.

No change to the core deposit rate was revealed, despite a recent leap in inflation, partly due to the fact that rising government borrowing costs across Europe, especially France, were already having a dampening effect on demand.

Her early departure is, in one way, good for the ECB as it allows European leaders time to elect a replacement who is pro-EU amid a rising tide of populism within the bloc and ahead of the election in France.

The country holds considerable weight within the Bank as the second-largest economy within the euro area.

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But Matthew Ryan, head of market strategy at financial solutions firm Ebury, said: "The timing for the ECB is far from ideal. Lagarde's departure comes as the Iran war keeps inflation well above target, where it looks set to stay for some time. European bond markets are also under strain, with the French-German spread at its widest since 2011.

"Klaas Knot (Dutch) and Pablo Hernández de Cos (Spain) are seen as the frontrunners.

"Knot, a hawk, would likely reinforce expectations of further tightening, which could be bullish for the euro. Hernández de Cos, the more dovish of the two, would likely place greater emphasis on growth and bond-market stability, which matters more than ever given the strain in French debt."

(c) Sky News 2026: Lagarde quits European Central Bank ahead of French election