Euro Zone governments intend to reach an agreement by the end of the year for the succession of three top positions at the European Central Bank, which include President Christine Lagarde, Chief Economist Philip Lane, and Executive Board member Isabel Schnabel. According to the Financial Times, cited by the article, Lagarde may announce this year that she will leave the institution in early 2027, before the next French presidential elections, although she herself has publicly assured that she does not see herself free from the position before October 2027.
The ECB leadership reshuffle comes amid great volatility in global bond markets, with more than six months of war in the Middle East aggravating the costs of European public debt. France's April elections also weigh on European leaders' decisions, with Marine Le Pen, the far-right leader, appearing as the favorite to succeed Emmanuel Macron. A senior official involved in the process considered this the most important nomination decision in Europe until 2029.
The two main candidates for Lagarde's succession are Pablo Hernández de Cos, leader of the Bank for International Settlements, and Klaas Knot, former president of the Dutch central bank. Joachim Nagel, president of the Bundesbank, has expressed interest but is considered an unlikely choice, as it would be unprecedented for two German citizens to simultaneously lead the ECB and the European Commission. For the chief economist position, names such as Markus Brunnermeier from Princeton, Monika Piazzesi from Stanford, and Tobias Adrian, former senior economist at the IMF, are being discussed. Paris is advocating for Agnès Bénassy-Quéré or Laurence Boone, while Germany is expected to block any solution that places a Dutch person in the presidency and a German as chief economist.
The ECB has already raised interest rates twice this year to curb inflation, having revised upward its projections for prices in the Euro Zone, now forecasting that inflation will reach 3% this year, before slowing to 2.5% in 2027 and 2.1% in 2028. Faced with the deadlock in negotiations, there is a possibility of a surprise candidate emerging, similar to what happened in 2019, when Macron unexpectedly presented Lagarde as the main candidate. François Villeroy de Galhau, former governor of the Bank of France, may emerge as an unexpected option.
