Christine Lagarde said Monday that she intends to continue as European Central Bank (ECB) president to make sure inflation stays in check, months after a report claimed she would leave the post.
"I have a sense of duty and I believe that when there's a bit of a storm, the captain remains on deck. So the captain of the European Central Bank is on deck," Lagarde told France Culture radio.
She also welcomed news of a tentative deal between the U.S. and Iran, saying it could help reopen the key Strait of Hormuz, although fellow policymaker Joachim Nagel cautioned it would bring no immediate relief to high eurozone inflation.
U.S. and Iranian officials said overnight they had reached an agreement to end their war and reopen the strait, a gateway for energy shipment, in a preliminary pact that sent oil prices falling and curbed bets on ECB rate hikes.
The Financial Times said in February, citing an anonymous source, that Lagarde would leave before October 2027.
That would give French President Emmanuel Macron and German Chancellor Friedrich Merz time to line up a successor ahead of France's presidential vote in April 2027, in case of a victory by the euro-sceptic far-right National Rally.
Lagarde had declined to comment directly on the report.
"What I could have considered last February was in a particular situation" where inflation was near the bank's benchmark rate of 2% and "the digital euro was on track" to getting legislative approval, Lagarde said Monday.
"So I could say to myself with a degree of confidence that the mission was accomplished, that I was 70 years old and in the end, I could perhaps retire a bit earlier than planned," she said.
The ECB raised interest rates for the first time in nearly three years last week to try to curb inflation before the surge in energy costs that has followed unprecedented supply disruption linked to the Iran war spreads further across the eurozone economy.
Financial investors, who had largely been betting on two more ECB rate hikes over the next year, pared back their expectations on Monday. They now see just one additional increase, with only a marginal chance of a further move.
"My duty is to accomplish the mission, price stability, and for the moment that is what guides my action," Lagarde said, adding that she wanted to "hand over the keys to an ECB that will have guaranteed" that stability.
Speaking later in Frankfurt, ECB Governing Council member Joachim Nagel noted financial markets' reaction to the U.S.-Iran agreement showed investors were anticipating a lasting solution to the conflict.
But he remained more cautious about the impact on eurozone inflation, saying there would be no immediate relief even if the Strait of Hormuz reopened soon because it would take months to restore oil supply to its pre-war level.
"No relief is in sight for the foreseeable future," Nagel, who heads Germany's Bundesbank, said. "On the contrary: even if the Strait of Hormuz were to become navigable again soon, it will take months for the oil supply to return to normal."
He argued inflation in the eurozone would remain elevated even in the ECB's "mild" scenario, in which energy prices fall faster.
In fact, another increase in inflation should be expected when government measures to limit energy price rises expire, Nagel said. These measures, which include a fuel price discount at the pump in Germany, have dampened the inflation rate in the eurozone by 0.4 percentage points in May, he added.
The German central banker reaffirmed his view that all options – meaning both holding interest rates steady or increasing them – remain for the central bank's next policy meeting on July 22-23.
Lagarde too struck a cautious note in her radio interview, saying "the whole question of uranium enrichment remains to be debated, agreed and concluded in the form of an agreement."
