European Central Bank chief Christine Lagarde quits as moribund eurozone economy stumbles

Updated: 07:28 EDT, 29 October 2026 The head of the European Central Bank (ECB) has quit as crisis grips the sclerotic eurozone economy.In a shock announcement, Christine Lagarde said she will step down around nine months early on February 7.The move comes as the single currency bloc reels from weak economic growth, rising inflation and mounting concerns over the finances of her home country and the euro area’s second-biggest economy – France.France, which has been branded ‘the sick man of Europe’, has been rocked by mass protests and violent demonstrations in recent weeks ahead of what could be the most divisive election in a generation.At the same time, French borrowing costs have soared as the country is battered by bond market investors concerned about the country’s parlous finances.With the eurozone grappling with an inflation shock like the UK, the ECB has been raising interest rates in a bid to keep the economy on track. Christine Lagarde is standing down early as head of the European Central BankLagarde, a former head of the International Monetary Fund, was due to stay on as president of the central bank until the end of October having taken the reins in November 2019.But speculation about an early departure has been mounting for months – with Lagarde tipped to take the helm of the World Economic Forum group behind the annual Davos gathering.‘I leave this institution with a sense of good work done, and an ECB that is fit for the future,’ Lagarde said in a video message.Her decision to stand down will give current European Union leaders time to pick a successor well before a French presidential election that polls show far-right candidate Marine Le Pen is favourite to win.‘European Central Bank President Christine Lagarde today informed the Governing Council and the President of the European Council António Costa that she will step down from her position on 7 February 2027,’ the ECB said in a statement.The former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernandez de Cos, are seen as frontrunners to replace Lagarde.The ECB is in the middle of a rate-hiking cycle, seeking to prevent an oil-price shock linked to the Iran war from feeding into other prices and wages.But it must also contend with a surge in government bond yields – particularly in debt-laden France – that has pushed up borrowing costs for households and businesses and which Lagarde has said will curb growth and inflation.Caught between persistent inflation fuelled by a renewed surge in energy costs and deteriorating financing conditions, the ECB is widely expected to keep interest rates at 2.5 per cent today while signalling that another increase, potentially as soon as December, remains likely.‘To ensure a smooth transition to the next leadership of the ECB, the process for the appointment of her successor will be initiated today and will proceed without delay, with a view to a timely decision by the European Council,’ Costa said in a statement.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you