Uncertainty is not welcome at the helm of big organisations, particularly at vital public bodies such as the European Central Bank (ECB). For this reason, ECB president Christine Lagarde needs to clarify her intentions in relation to her role sooner rather than later. The majority view in the markets is that she is planning to leave before her term ends in October 2027, with many believing that she will depart later this year. But nothing, so far, is clear.
The ECB president has previously confirmed that heading the World Economic Forum, the body which has its annual meeting in Davos, was one possible option after her time in the ECB. Then, a recent report in the Financial Times about Lagarde, quoting someone “familiar with her thinking”, said she planned to leave before next spring’s French presidential election, to allow Emmanuel Macron to have a key role in appointing her successor.
Subsequently Lagarde told the Wall Street Journal that her “baseline” was to see out her full term, a phrase still leaving significant room for manoeuvre. She refused to answer questions on the issue at a meeting with MEPs on Thursday.
This situation is unsatisfactory. The ECB is meant to be apolitical. Its governing council must be seen to make its key decisions on interest rates and other matters independently. If Macron is seeking to influence the appointment before the election, in case he loses to a candidate from Marine Le Pen’s right wing Rassemblement National, the process – already too prone to trade-offs between member states – starts to look like a complete political stitch-up.
Unless she makes her position clear, Lagarde now risks becoming a “lame duck” president and damaging the institution. Speculation has already started about her successor. Lagarde should now either confirm that she intends to go and give a timeline to allow an orderly succession process. Or give a clear and unequivocal statement that she intends to see out her term – and stick to it.