CHRISTINE Lagarde is about to face scrutiny on her commitment to keep leading the European Central Bank, not least as she nears the milestone of having just about tamed inflation.
The president, who will hold a press conference on Thursday to present the Governing Council’s latest policy decision, has been courted for the top job at the World Economic Forum in Switzerland, even though her term in Frankfurt officially lasts for another 2 1/2 years.
It’s not unprecedented for those in her position to get quizzed on such matters by reporters, as happened with her predecessor Mario Draghi when speculation arose that he might become Italian head of state. Even so, such queries would highlight just how much Lagarde finds herself at a crossroads at present.
Alongside a widely expected eighth cut in borrowing costs, the ECB chief will unveil new forecasts for consumer prices that are likely to show them at target in the medium term after inflation slowed to 1.9% in May, below the 2% goal for the first time in eight months.
That achievement could work in the WEF’s favor: The Financial Times reported last week that returning price stability to the euro zone was one criteria Lagarde would want to meet before taking the job in Geneva. The same article cited WEF founder Klaus Schwab as saying that she in early April had discussed cutting short her term to succeed him as chairman.
Previously, Bloomberg had reported that the WEF had held internal discussions on a potential Lagarde appointment as chair, according to people familiar with the matter.
Other than stating Lagarde’s determination to see out her time in the job, the ECB has not issued an outright denial of talk between Schwab and her. That raises the prospect that she might have at least contemplated a premature exit.
Contacted by Bloomberg, an ECB spokesperson reiterated that “President Lagarde has always been fully committed to deliver on her mission and is determined to complete her term.”
If the president wanted to depart imminently, this moment could be as good as any, as she could make a claim to be accomplishing her central mission.
A strategy review due in coming weeks would allow her to set the scene for any successor. Meanwhile the selection of a new ECB chief would take place at a time of relative political stability in the euro zone’s main countries, notwithstanding the collapse of the Dutch coalition this week. By contrast, when her final year in office comes around in 2027, France’s far-right National Rally could be about to clinch the presidency there.
Were she to exit at the end of 2025 that would come just before she turns 70 on Jan. 1.
“This has been a successful year of monetary policymaking by ECB President Christine Lagarde and her colleagues,” Joe Nellis an economic adviser at accountancy and advisory firm MHA and a professor at Cranfield University in the UK, said in a report. “They have set the foundations for economic growth, put the inflation issue to bed, and appear to have returned normalcy to the economy — at least for now.”
Lagarde has previously quit early: she did so from her stint as managing director of the International Monetary Fund in 2019 to take up her role in Frankfurt. She also publicly denied interest in the ECB job beforehand, in a 2018 interview with the FT.
But there’s also a case for her to stay on for the remainder of her term: the euro zone needs as steady a hand in policymaking as it can get as it navigates global turbulence stoked by the stop-start tariffs and trade uncertainty of US President Donald Trump.
There’s also the question about why she would want to give up arguably the world’s second-most important job in global central banking after that of leading the Federal Reserve.
Lagarde has been a member on the WEF’s Board of Trustees since 2019, a role that officially qualifies her to succeed Schwab, the leading force at that organization for more than half a century. He stepped down from all of his duties on April 21 after accusations of financial misconduct, which he denies.
Despite her name being floated almost every time a top job comes up in France, there wasn’t much reason to doubt until now that the ECB president would serve out her term. Even if she attempts to quash such speculation on Thursday, questions will linger until a WEF chief is found. –BLOOMBERG
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