The European Central Bank (ECB) is as closely watched these days as it ever has been. After raising interest rates in June for the first time in three years, it followed with another hike in September. And if that wasn’t enough, economists have not discounted the possibility of another rate hike before the end of the year. Perhaps as soon as the next governing council meeting in October.
Even if the bank leaves rates on hold in October, that meeting will still be one of the most closely watched economic events of the year, as it will in effect fire the starting gun on the round of negotiations that will see three of the top positions in the Frankfurt-based institution change hands.
The ECB said on Thursday that Isabel Schnabel, head of the bank’s market operations, will leave her post a year early to take a senior role at the IMF. As well as her role, Christine Lagarde’s term as president ends in October 2027 amid continued speculation she may leave early, while its Irish chief economist Philip Lane – a former Central Bank of Ireland governor – is due to finish his term in May.
The reality with these supranational jobs is that they are political roles as much as economic, amid jockeying and negotiations between countries to find acceptable candidates for those positions.
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Whereas Ireland was in the thick of those negotiations last time around, with Lane long spoken about as the favourite to take the chief economist role, this time around it seems more likely his replacement, as well as Schnabel and Lagarde’s, will come from the traditional European core nations. Germany, France, the Netherlands and Spain are all thought to be vying for the key positions.
For ECB watchers, Schnabel’s replacement may give a clue as to what will happen with the other two roles. Germany in effect has the right to nominate whatever replacement it wants for her position. If Berlin puts forward a German national, that will be seen as a sign it won’t put forward a candidate to replace Lagarde. If someone from another country replaces Schnabel, expect Germany to seek its own replacement for Lane or Lagarde.
There will be lots of talking before those roles are filled, starting with the ECB council meeting next month.
