European Central Bank President Christine Lagarde has indicated she does not rule out the possibility of ending her current term early to engage in French politics.
According to a Bloomberg report, when asked by Les Echos if she would consider an early departure should macro uncertainties subside, Lagarde responded, "It's a possibility." She stated, "I believe there needs to be a European voice in the discussion surrounding the French presidential election."
In the same interview with Les Echos, Lagarde reiterated a previous stance, saying, "Because we are once again entering a period of turbulence, I believe the captain of the ECB ship should remain at the helm."
Lagarde has long been viewed as a significant potential figure in French politics. However, she has previously described the role of French president as "a dreadful job."
Her current term as ECB President is set to end in October 2027. She told Les Echos that in the coming months, "it is certainly possible" she could have frank discussions with some French presidential candidates. She added, "If this debate ultimately presents a more narrow view of France's place in Europe, I believe it is necessary to explain why that would be a path that costs our country and all French people."
Lagarde Defends Last Month's ECB Rate Hike Decision
In the interview, Lagarde also defended the ECB's decision to raise interest rates last month.
She stated, "We are convinced we made the right decision. As early as April, a vast majority of the Governing Council was ready to act, but at that time we did not have all the necessary information."
In June, following the outbreak of the Iran war, the ECB became the first central bank among the G7 nations to initiate a rate hike. The ECB stated at the time that the shock was spreading throughout the economy and that the bank could not tolerate inflation getting out of control, hence the decision to raise rates.
However, a subsequent peace agreement between the US and Iran led to a significant drop in international oil prices, removing a major factor driving inflation higher. The latest data released on Wednesday showed that inflation growth in the Eurozone slowed more than market expectations.
Despite this, Lagarde believes the supply shock continues to transmit to other parts of the economy, although the so-called "second-round effects" have not yet materialized.
She said, "We are facing an external supply shock that is diffusing into other parts of the economy, and we are now beginning to see its indirect effects. At the same time, we are also highly attentive to the risk of second-round effects emerging, although that has not happened so far."
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