Christine Lagarde says early ECB exit ‘possible’ as election looms

The European Central Bank’s Christine Lagarde has declined to rule out an early end to her term as president, as she mulls a foray into French politics.

Lagarde, whose term as ECB President ends in October 2027, told French newspaper Les Echos an early departure is “possible” ahead of the country’s presidential elections that year.

“I think a European voice must be heard in the French presidential debate,” Lagarde said. “If this debate were to present a perspective that diminishes France’s place within Europe, I think it would be necessary to explain why this would be a painful path for our country and our citizens.”

Asked whether she would consider personal involvement in the French Presidential campaign, to support a candidate or run herself, Lagarde said: “I’m going to ask myself some questions.”

Leader of the far-right National Rally party Jordan Bardella is currently the frontrunner in polls to replace President Emmanuel Macron, who entered office in 2017 and is not running for re-election.

The first round of voting will take place in April, with a runoff to follow between the top two candidates if none wins 50%.

Macron faced the National Rally, then called Front National, at the runoff stages in both 2017 and 2022.

Bardella has pledged a realignment of France’s place in the European Union, promising to put the European Commission and the EU “back at the service of nations and no longer the other way around”.

The euro sold off in February in the wake of a Financial Times report that Lagarde was considering making an early exit from the ECB. The ECB said at the time that no such decision had been made.

The ECB declined to comment on Lagarde’s latest remarks when approached by CNBC.

Lagarde told Les Echos that she is committed to her role at the bank in the short term: “My term ends in October 2027. And I believe my mission is to maintain price stability. As we are once again in a period of turbulence, I believe the captain of the ECB ship must remain on board.”

Even if she remained at the ECB until the end of her term, Lagarde could still involve herself in the Presidential debate.

Asked whether she could have a “frank discussion” with some of the presidential candidates in the coming months, Lagarde said: “That’s very possible.”

“I would have a French and a European voice because I am deeply committed to both,” she added. “I would tell them that, in terms of the economic future of our continent, France must play a decisive role. And that without this European environment and these European roots, the economic outlook is, at the very least, clouded.”

The French government is currently attempting to pass contentious budget cuts of at least 4 billion euros ($4.6 billion) as it attempts to rein in debt and reduce its public deficit to the 3% of GDP benchmark required by the EU by 2029.  

French Finance Minister Roland Lescure has recently reaffirmed the state’s commitment to a 5% target in the short term on its way to reaching this goal.

Lescure told CNBC’s Charlotte Reed on Friday that debates around the 2027 election must not get in the way of passing this year’s budget.

He said: “There’s a win-win one in which we focus on the budget, they let us pass it, we find a compromise that…[not all parties will be happy with], but at least that’s going to make sure we have a budget.

“And on the other hand, the big debates about 2027 and beyond take place. We can decorrelate both, [but] if we don’t, and if one becomes the hostage of the other — the budget hostage to the campaign — it’s not going to work.”

“So hopefully reason will be well, we manage to decorrelate both. We’ll see.”

Since Macron’s re-election in 2022, France has had five prime ministers, reflecting an increasingly fragmented parliament that has made it difficult to pass economic reforms.

Lagarde told Les Echos: “France will have to make courageous decisions on difficult issues. Presidential candidates have a duty to examine these issues and propose solutions.

“And, contrary to what I often hear from politicians, the French people are perfectly aware of the situation and they expect a discourse of truth and solutions.”