World Economic Forum could appoint Lagarde as chair, opening path to ECB reshuffle

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WEF may prompt ECB reshuffle

Highlights

World Economic Forum board may appoint Christine Lagarde as chair on November 2 or set a future vote date ahead of January's Davos gathering.
Lagarde's early departure from the ECB could allow EU leaders to select her successor before French President Macron's term ends in May, amid concerns of French political shifts.
Departures of Lagarde, Isabel Schnabel, and soon Philip Lane would open three ECB Executive Board positions, with Klaas Knot and Pablo Hernandez de Cos leading presidential contenders.

November timetable and board process

As first reported by Reuters, the World Economic Forum could appoint Lagarde as its next chair as soon as November 2, when the organisation's Board of Trustees is due to meet. Four people close to the WEF say no final decision has been taken, and two of them say the board could instead use the meeting to set a date for a later vote ahead of the annual Davos gathering in January.

Lagarde, a member of the WEF board herself, is said to have broad support among the 27 trustees listed on the organisation's website. The WEF has not immediately responded to a request for comment, while the ECB has declined to comment.

Lagarde is attending the IMF and World Bank annual meetings in Bangkok this week and has said she will remain at the ECB until next year, but she has not committed to staying through the formal end of her term in October 2027.

ECB succession and political implications

An early departure would give EU leaders enough time to complete the bloc's appointment process before French President Emmanuel Macron's term ends in May. One person says Lagarde's wish to allow Macron a say in choosing her successor is one factor in the timing, amid concern that a victory by far-right leader Marine Le Pen in the spring French election could complicate negotiations.

Her exit would create a second vacancy on the ECB's six-member Executive Board after Isabel Schnabel's resignation last month, while Chief Economist Philip Lane is due to step down in May. EU officials say the presidency, the chief economist role and Schnabel's replacement could be agreed in a package deal among member states.

Former Dutch and Spanish central bank governors Klaas Knot and Pablo Hernandez de Cos are seen as leading contenders for the ECB presidency. France is understood to be targeting the chief economist post, while Germany plans to nominate a candidate to replace Schnabel in charge of market operations.

Our earlier article on Mario Draghi’s warning about the euro area policy dilemma explained that keeping interest rates above growth for too long can worsen debt dynamics and raise pressure for “fiscal dominance,” even as central banks must keep inflation under control. It also argued that, where possible, policymakers should pursue the lowest rate path consistent with price stability to limit damage to investment and productivity, alongside EU-level measures to support longer-term growth.

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