Lagarde will leave office early

In the statement made by the ECB, it was stated that President Christine Lagarde will leave her post on February 7. Lagarde's 8-year term was expected to end on October 31, 2027 under normal circumstances.

Lagarde's decision to leave early, along with other changes in the ECB's senior management next year, will also accelerate political negotiations among European Union (EU) leaders regarding new appointments.

The ECB President, who chairs the ECB Governing Council, which determines the interest rates of 21 countries using the euro, plays an important role in directing monetary policies that affect borrowing costs in many areas, from housing purchases to new factory investments. The bank is also among Europe's leading institutions in crisis management in times of economic and financial turmoil.

Expectations that Lagarde would leave before the end of her term of office were raised before the decision was announced. It is considered that an early departure will give EU leaders the opportunity to determine his successor while French President Emmanuel Macron is in office.

It is stated that this step is a precaution against the possibility that far-right presidential candidate Marine Le Pen will be effective in determining the president of the ECB if she wins the elections in 2027.

Berenberg Bank Chief Economist Holger Schmieding stated that Lagarde's early departure was not a surprise and said, "Her early departure is not a surprise and does not change the outlook on ECB policies."

European Council President Antonio Costa also said regarding the process of determining his successor, "The process will start today and will proceed without delay."

There will also be changes in other senior positions at the ECB next year. The term of the bank's chief economist Philip Lane will end on May 31. ECB Executive Board member Isabel Schnabel will leave her post at the end of the year to move to the International Monetary Fund (IMF).

Thus, new appointments will need to be made for three senior positions in the ECB, including the presidency. EU leaders are expected to reach a comprehensive political agreement, taking into account the distribution of tasks among member states.

Schmieding stated that EU leaders may try to reach an agreement on all three positions before the summit to be held on December 17-18.

Noting that former Dutch Central Bank Governor Klaas Knot and Bank for International Settlements (BIS) General Manager Pablo Hernandez de Cos stand out among the names that could replace Lagarde, Schmieding also drew attention to the election calendar in France in his evaluation.

Schmieding stated that the EU is trying to secure itself to some extent against the risk of far-right Marine Le Pen winning the French presidential election, which is expected to be held between April and May 2027. Schmieding stated that Lagarde's successor would be appointed while the pro-European centrist Macron was in office at the Elysee Palace.

Lagarde, the former head of the International Monetary Fund, took over the post of ECB President from Mario Draghi in 2019.

One of the important decisions during Lagarde's term was the emergency support program launched in 2020 to prevent the COVID-19 epidemic from interrupting the flow of credit to the economy. In this context, the ECB provided incentives worth 1.35 trillion Euros through bond purchases.