European Central Bank President Christine Lagarde dismissed rumors of an imminent announcement about her early departure as she presented the central bank’s decision to raise rates today.
“When there is something to report about me personally, you’ll be the first one to know after my grandchildren, and there is nothing to report,” Lagarde said during a press conference following the ECB’s decision to raise its key deposit rate to 2.5%.
Speculation about Lagarde stepping down from her role before her term officially expires in Oct. 2027 has circulated since June 2025, amid reports linking Lagarde to the chairmanship of the World Economic Forum.
Lagarde has since floated an early ECB exit to play a role in the French presidential campaign. She continues to refuse to rule out leaving before the end of her term, although has said she will stay at least until the end of the year.
At today’s meeting, the ECB raised its key deposit rate for the second time this year, as energy prices driven by the Middle East war threaten to keep inflation above target through 2028.
The hike was widely expected after inflation topped the 2% price-stability target for six straight months, reaching 3.3% in August as energy inflation surged to 14.3%. Oil topping $100 a barrel after fresh escalation in the Middle East suggests little relief is in sight.
ECB staff lifted the inflation forecast for 2027 to 2.5%, from 2.3%, and for 2028 to 2.1% from 2% — enough to put it just above the ECB’s 2% target. “The outlook remains highly uncertain, with risks to the upside for inflation,” the ECB said in a statement.
Lagarde kept the door open to further rate hikes but offered no guidance on the path ahead, as policymakers weigh persistent inflation against the economic fallout from the war and rising government borrowing costs.
The eurozone economy has so far held up surprisingly well. The ECB raised its growth forecasts for 2026 and 2027 to 0.9% and 1.4%, respectively, “mainly reflecting the greater than expected resilience of the euro area economy.”
Yet further hikes would push rates into restrictive territory and risk damaging growth. Bond markets are already tightening financial conditions as long-term yields have reached levels not seen since before the global financial crisis.
The deteriorating inflation outlook and persistent uncertainty about the Bank’s leadership may tilt the chances toward further tightening. In addition to Lagarde’s possible early departure, fellow executive board member Isabel Schnabel has been linked to a possible early exit.
“If these two leading members of the ECB’s Governing Council are preparing to leave, that argues for a tougher stance,” ZEW economist Friedrich Heinemann said. “Neither will want to go down in eurozone history as the central banker who paved the way for a new bout of inflation.”
Lagarde is set to speak Saturday at an event in Normandy hosted by Hervé Morin, who served as a government minister alongside the ECB chief during Nicolas Sarkozy’s presidency.