Christine Lagarde says she will leave the European Central Bank in February, months before her term ends, and the bank holds rates at 2.50 percent

Lagarde became the fourth president of the European Central Bank in 2019, succeeding Mario Draghi, and she is the second French citizen to hold the job. Her term runs to October 2027. She will leave on February 7 instead. “I leave this institution with a sense of good work done, and an ECB that is fit for the future,” she said in a video message.

European Council President Antonio Costa said the appointment process for her successor will begin at once and move without delay so the council can decide in good time. The winner will set interest rates for the 21 countries that use the euro and their more than 350 million people.

The announcement came on a decision day. The bank held its deposit rate at 2.50 percent on Thursday, after raising rates twice since June to keep an oil price shock from the Iran war from settling into wages and other prices. Euro area inflation stands at 3.8 percent, as of October 29, with energy prices running well above last year levels. Markets are pricing further increases, possibly as soon as December.

France hangs over the decision. French government bond yields have jumped on budget worries, and the gap between French and German ten year yields has reached its widest in about fifteen years, which raises borrowing costs for French households and businesses and complicates every rate decision the bank makes. Lagarde's early departure also lands before the French presidential election in the spring of 2027, which polls suggest the National Rally could win. Leaving in February lets President Emmanuel Macron and the other European leaders fill the job before that vote.