The number of the day is 2.5% a year: the European Central Bank (ECB) kept the euro zone's deposit rate at that level on Thursday (29), which means mortgage and loan payments stay unchanged, for now, for households across the bloc. The decision came on the same day the ECB confirmed the resignation of its president, Christine Lagarde, who will leave office on February 7, 2027. Together, the two announcements set the course for the cost of credit across the euro zone.
Lagarde's term was due to end only in late October 2027; leaving in February shortens the cycle by almost nine months, as if a mayor elected for four years stepped down nearly a year early. The early exit gives European Union leaders time to choose a successor before next year's French presidential election, in which far-right candidate Marine Le Pen leads the polls, according to G1. Lagarde has ruled out running for the French presidency and said she wants to defend pro-European values "in whatever role she considers most effective".
A source heard by Reuters said Lagarde resigned to gain more freedom to speak out on political issues in France and abroad, something the neutrality required by the job prevented. In a video posted on social media, she said she leaves the institution with a sense of "a job well done" and an ECB "prepared for the future".
Understanding the rate: the ECB's deposit rate works like the Federal Reserve's benchmark in the United States or the Selic in Brazil: it is the interest paid to banks on money parked at the central bank and sets a floor for the cost of credit. At the current 2.5%, the benchmark equals roughly 25 euros a year for every 1,000 euros, before bank charges. The ECB also held its refinancing rate at 2.65% and its lending rate at 2.90%, according to Estadão Conteúdo.
Rates and inflation
Thursday's pause followed a 0.25 percentage point hike in September, part of a tightening cycle aimed at curbing inflation, which remains above the ECB's 2% target, meaning prices are rising faster than the central bank considers healthy. The outlook is pressured by the oil price shock linked to the Middle East war and by surging yields on French government bonds, which raise financing costs for households, companies and governments. Oliver Rakau, an economist at Oxford Economics, sees little resistance to another increase as early as December if costlier energy leads the ECB to revise its inflation projections upward.
Reactions and succession
The resignation split opinion in Europe. Markus Ferber, a German member of the European Parliament from the European People's Party who sits on the committee that will vet the next ECB president, said the move sends "the wrong signal" at a time of high inflation and upcoming elections. Marcel Fratzscher, head of the German economic institute DIW, argued that Lagarde showed a "strong sense of responsibility toward Europe", and French President Emmanuel Macron thanked her for her work and called for an "orderly and balanced" transition.
European Council President António Costa said the process of choosing a successor begins immediately. The most cited names are Klaas Knot, former head of the Dutch central bank, and Pablo Hernández de Cos, former head of the Spanish central bank, both seen by analysts as experienced enough to avoid turbulence. Markets reacted little to the announcement: according to Simon Dangoor of Goldman Sachs, the ECB's behavior tends to stay similar regardless of who takes over, and the World Economic Forum, pointed to as a possible destination for Lagarde, declined to comment when approached by Reuters.