Bank of France Governor Francois Villeroy de Galhau unexpectedly quit today, citing personal reasons.
In a letter to central bank employees, he said he was offered a role to run a foundation for troubled youngsters and couldn’t refuse.
“A bit more than a year before the conclusion of my second term, it
seems to me that I would have accomplished the core of my mission,” he said.
There is speculation that there are other reasons for the move, including allowing Macron to choose a replacement rather than a potential far-right leader following elections.
In any case, the ECB is firmly on the sideline at the moment. The market sees only a 20% chance of a rate cut through year end. It could be that Villeroy truly sees his mission as done and didn’t want to sit through a year of rubber-stamp meetings.
Villeroy will stay on until early June, which he said is sufficient to find a replacement.
In a statement, ECB President Christine Lagarde said she has great respect for Villeroy’s decision to step down and wished him the best.
The euro is stronger today amidst a broad US dollar selloff. It’s up 89 pips to 1.1905.
EUR/USD 1 hr
The move in the euro is in-line with the gains in other currencies against the US dollar today.
The decision by Villeroy to step down adds another layer of intrigue in internal ECB politics. The wranging for the Presidency is already underway. Last month, Boris Vujcic of Croatia as the next vice president of the European Central Bank, taking over from Spain’s Luis de Guindos.
