WEF’s interest in Lagarde sparks questions about her long-term commitment to ECB

WEB DESK: 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 2.5 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 percent in May, below the 2 percent goal for the first time in eight months.

That achievement could work in the WEF’s favour: 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 has discussed cutting short her term to succeed him as chairman.

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Other than stating Lagarde’s determination to set out her time in the job, the ECB has not issued an outright denial of such talks. That raises the prospect that she might have at least contemplated premature exit.

According to 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 see 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 January 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.