Speculation has long swirled that Lagarde, formerly finance minister under President Nicolas Sarkozy, may throw herself back into French politics. She has stressed the need for “a pro-European voice” in the French elections in the past, but remained coy on Thursday about running herself. Her announcement comes at a time when candidates from mainstream camps in France are all losing ground to Mélenchon, who wants the ECB to “set fire” to its French debt holdings. None looks likely to make the final round of the presidential election in May.

Whoever follows her as ECB president will inherit an increasingly tense situation in Europe’s bond markets, where borrowing costs are hitting their highest level in years due to a cocktail of war-fueled inflation, demographics and competition from capital from Big Tech companies chasing AI-related riches. 

The problems are particularly acute in France, the eurozone’s second-largest economy, which faces a political impasse and mounting pressure over its public debt.  Lagarde declined to speak about France specifically on Thursday but warned that “those countries with high debt have to factor into their fiscal policy plans the fact that interest rates are higher and will probably remain higher for a period of time.”

Lagarde succeeded Mario Draghi at the ECB in 2019, after leading the International Monetary Fund and, in her time in office, has been a stalwart of the centrist mainstream that is now being squeezed by both wings of the political spectrum across Europe. 

“Christine Lagarde has led the European Central Bank through difficult times,” German finance minister Lars Klingbeil said in a statement.  “Under her leadership, the ECB has kept the euro stable even during crises: when the coronavirus pandemic hit Europe hard, when Russia invaded Ukraine, and most recently in the face of the economic shocks caused by the war in Iran.”

“Christine Lagarde’s tenure at the helm of the ECB has only strengthened the confidence in the European single currency,” Eurogroup President Kyriakos Pierrakakis said in a statement, promising to give the council a “swift” recommendation on the succession to heads of government.

The ECB gave no details about Lagarde’s plans after leaving Frankfurt. However, she has talked to the World Economic Forum about taking over as chair, according to its founder Klaus Schwab. Reuters reported that the organizer of the Davos event could announce her appointment as early as this month.  

This story has been updated with comments from Lagarde’s press conference. Giorgio Leali contributed reporting.