The European Central Bank is widely expected to hold rates steady when it meets this week, so alongside discussions of the Middle East energy shock, attention may turn to who will be the policy-setting body’s next chief. If the bloc is serious about boosting competitiveness, it should appoint a German. Get a look at the day ahead in European and global markets with the Morning Bid Europe newsletter. Sign up here. Most of the central bank headlines of the past year have focused on who will replace current Federal Reserve Chief Jerome Powell when he steps down in May. But with markets mostly mollified by U.S. President Donald Trump’s orthodox nominee, former Fed board member Kevin Warsh, focus is turning to who will next lead the ECB. Advertisement · Scroll to continue
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The European rate-setting body isn’t due to get a new chief until late 2027. But the Financial Times reported in February that Christine Lagarde may stand down early to allow her successor to be chosen by euro zone leaders before French elections that could deliver a far-right, eurosceptic president. Lagarde has denied that report, at least when it comes to an imminent departure, but the French polls are more than a year away, so she still has plenty of time to step down before her official term ends. Regardless of the exact timing, the next appointment will come at a critical moment for the 27-member bloc’s economy, given the region’s fraying relationship with the United States, growing defence requirements and urgent need to boost competitiveness in the face of rapid technological change. Advertisement · Scroll to continue European governments are already jockeying for position. Spain has lobbied for the seat and the term of its ECB vice president, Luis de Guindos, ends in June, leaving the euro zone’s fastest growing economy short of a representative at the top table. Pablo Hernandez de Cos, the former head of Banco de Espana, appears to be in the running. Outside of Spain, another top candidate is ex-Dutch central bank chief Klaas Knot. But the candidate best-suited to enact change as head of the ECB may, perhaps surprisingly, be Bundesbank President Joachim Nagel. GERMAN DARK HORSE If Nagel took the top ECB job, it could help bind Germany more firmly to the critical EU economic reforms identified by former ECB President Mario Draghi that many experts believe are required to lift the region’s economy. These include a capital markets union and increased mutual borrowing by member states.
