Euro: Lagarde to Leave Early

The ECB kept its deposit rate at 2.5% on Thursday, hours after President Christine Lagarde said she will step down on February 7, 2027, nine months before her term ends, because she can no longer “remain neutral.” Lagarde said the Governing Council debated a hike before holding unanimously, and signaled the pause may only last until December. She noted the average eurozone 10-year bond yield has risen about 35 basis points, or 0.35 percentage point, since the September projections, and told high-debt governments to plan for rates staying higher for some time and keep budgets within EU rules, Euronews reported. She avoided naming France, blaming global factors instead.

The euro briefly fell to its lowest since May 2025 on Thursday and is on track for a 1.2% monthly drop, Reuters said, even though the ECB just talked about hiking. That shows the French bond problem and the leadership gap matter more to traders than one extra rate move. Eurozone third-quarter GDP data are due Friday.