ECB Insight: Year of More Change Than Usual on Governing Council Could Tilt ECB Dovishly

1 November 2024

By David Barwick – FRANKFURT (Econostream) – With 26 members, the European Central Bank’s Governing Council is inevitably subject to a fair degree of turnover. This year, three new faces appeared on the Council, as governors of the Bank of Spain, the Central Bank of Cyprus and the Central Bank of Malta were all replaced (the latter - for now – officially on a temporary basis).

At the top of the hierarchy, ECB President Christine Lagarde still has exactly three years to the legal end of her term. However, a slew of national central bank governors – nearly a third of the Council - will see their mandates end over the next 12 months, so we took the opportunity to review where things stand in this regard with each member of the Council.

One can’t help but notice that it is above all relatively hawkishly inclined Council members who are on the verge of departure. All of the next four members whose term will be ending have been more hawkish than the average hawk on the Council, and only one of them - Latvijas Banka Governor Mārtiņš Kazāks – seems to have a reasonable chance of being reappointed.

So, while it is natural to conjecture that at least some of the hawks will be replaced by other hawks, it is less likely that their successors will match their level of hawkishness. Dutch Council member Klaas Knot and his Austrian counterpart, Robert Holzmann, both leaving around the middle of 2025, are good examples of this.

Moreover, their successors will by definition be newcomers, lacking in stature at the outset, so that leadership among the hawks seems destined to suffer. In particular, with Knot’s exit, the hawks stand to lose the longest-serving member of the Council, and a particularly prominent one at that.

The ECB may well have finished cutting rates by the time these effects set in, and perhaps any impact will be marginal. Still, we can’t help but wonder if the ECB is poised to become structurally somewhat more dovish.

In any case, we start with the Council member whose current term of office is over the soonest as of today and proceed from there:

20 December 2024 - Mārtiņš Kazāks, governor of Latvijas Banka: Kazāks is hoping for another five-year term of office, as we reported in September. Latvian Prime Minister Evika Siliņa said on Wednesday that neither her party nor the ruling coalition as a whole had held substantive talks on the matter yet, but that such a discussion should take place as soon as the 2025 state budget is adopted, which will presumably be on 4 December. Speaking on Latvian Television, she evaded a question about rumours that a politician from her party could be eyeing Kazāks’ post. Traditionally hawkish, Kazāks’ full-throated support for cutting rates in October surprised some.

8 January 2025 - Boštjan Vasle, governor of Banka Slovenije: Vasle had also desired a second six-year term, but the Slovenian president ultimately proposed former prime minister Anton Rop for the post, effectively dashing Vasle’s hopes of reappointment. Rop must still secure the support of a parliamentary majority in a vote to take place in the coming weeks. Vasle has been less vocal than many of his outspoken peers, but leans decidedly hawkish.

1 June 2025 – Peter Kažimír, governor of the National Bank of Slovakia: Dogged by corruption charges stemming from his earlier stint as finance minister, Kažimír is probably anything but preoccupied at this point with the question of whether he would be able to extend his current position for another six years (the limit is two terms). If and when he does, a significant number of Slovakian politicians are likely to be opposed, having already called repeatedly for him to resign while his legal woes wind their way through the system. Although Kažimír rarely speaks beyond post-meeting statements, his pronouncements have been consistently quite hawkish.

30 June 2025 - Klaas Knot, governor of the Dutch National Bank: A third seven-year term is virtually excluded, though there were rumours at one point that his mandate would be temporarily extended so as to facilitate a potential transition to the ECB’s Executive Board down the road. With a Dutch national now on the Executive Board, however, Knot’s route to Frankfurt is less straightforward, extension or no extension. Knot, who also chairs the Financial Stability Board, will vacate that office on 1 December 2024. With Knot’s departure, the hawks stand to lose one of their most prominent representatives, even if he has softened somewhat in recent years.

11 July 2025 – Olli Rehn, governor of the Bank of Finland: Rehn has expressed his interest in a second seven-year term at the head of the Finnish central bank, which, as required by law, announced on 18 October that it was seeking applications for the position (deadline 8 November). Parliament will make a proposal to the government, which will then submit a proposal to the president, who gets the final say. We suspect that Rehn, who was European Commissioner for Economic and Monetary Affairs and the Euro from 2010 to 2014, will emerge victorious, in contrast to his unsuccessful bid to become Finland’s president earlier this year, during which he took a leave of absence from the central bank. Rehn is centrist, though most recently has been quite concerned about the outlook for growth.

19 July 2025 – Mário Centeno, governor of the Banco de Portugal: We assume that Centeno, a Harvard-educated labour economist and only 58 years old when his current term of office ends, will seek a second five-year term. The statute of the Portuguese central bank allows up to two mandates, contingent on the approval of the Council of Ministers, an executive body consisting of the prime minister and all senior ministers. Centeno, who is one of the most frequently heard Council members, is as dovish as they come.

31 August 2025 - Robert Holzmann, governor of the Austrian National Bank: The Austrian government took the unusual step of making it clear at the end of last March, well before the term of any member of the central bank’s board was up, that it intended to replace all four members as their mandates expired, including Holzmann. Holzmann, at 75 the oldest member of the ECB Governing Council (not counting his Maltese colleague Edward Scicluna, who is at least temporarily not exercising the functions of his office), stated thereafter that he was not interested in a second term. Since then, it has been decided that he would be replaced by Austrian Labor and Economy Minister Martin Kocher. The outspoken Holzmann has been arguably the most hawkish Council member and was the only one to oppose the start of monetary easing in June.

31 December 2025 - Gaston Reinesch, governor of the Central Bank of Luxembourg: In marked contrast to the experience of a number of his colleagues who have had to wait until the last minute to find out that they were being reappointed (or, just as often, not), Reinesch, the second longest-serving Council member after Klaas Knot, had the luxury of knowing already in April that he would get a third six-year term when his current one ends at the end of this year. Presumably he will serve at least some of that term, though there are rumours that he may not stay until the very end, which would be at the end of 2030. Though the most reticent member of the Council by a wide margin, Reinesch is known to be on the hawkish side.

31 December 2025 - Edward Scicluna, governor of the Central Bank of Malta: Scicluna, beset by corruption charges, ceased at least temporarily from 1 August to exercise office, leaving Deputy Governor Alexander Demarco in the role of Acting Governor. At 78, Scicluna is easily the oldest member of the Governing Council, which – along with his legal problems - leads us to suspect that even if he returns to serve out his current term, he is highly unlikely to be reappointed. One of the quietest members of the Council, Scicluna is at least slightly dovish, and was ready to start cutting interest rates in March. Where Acting Governor Demarco stands in terms of monetary policy philosophy, and whether he will get the job on a permanent basis when Scicluna is definitively out, is less known.

30 March 2026 - Gediminas Šimkus, chairman of the board of the Bank of Lithuania: Currently the youngest member of the Governing Council and only on his first five-year term, we think there is good reason to believe that Šimkus will be interested in serving again. Šimkus is slightly hawkish, though more recently has been relatively supportive of policy easing.

31 May 2026 - Luis de Guindos, vice president of the ECB: De Guindos will be the first of the current Executive Board members whose term ends. None of them can be reappointed, the legal limit being one eight-year term. We will refrain from speculating here – with still almost two years to go – as to his possible successor.

26 June 2026 - Madis Müller, governor of Eesti Pank: The Estonian central bank is one of only two national central banks in the euro area (the other being the Bank of Spain) at which the governor is limited to one turn, so Müller will have to leave at the end of his current seven-year term of office. Müller is relatively hawkish, though by no means extreme.

26 June 2026 - Yannis Stournaras, governor of the Bank of Greece: Stournaras is the third longest-serving member of the Governing Council and one with a relatively high profile, given recent Greek economic history (in which Stournaras previously occupied the position of finance minister). Situated at the dovish extreme of the Council, Stournaras is in the last third of his second six-year term. Distinctly older than the average Council member and with a long career of public service, Stournaras had been expected to retire when his current term ends, but this remains to be seen and some expect otherwise.

For the sake of completeness, we continue to list below all remaining members of the ECB Governing Council by the date of their respective term end, but add nothing to this in view of how far off these potential departures remain:

31 August 2026 - Gabriel Makhlouf, governor of the Central Bank of Ireland

31 May 2027 - Philip Lane, member of the ECB Executive Board

31 October 2027 - Christine Lagarde, president of the ECB

31 October 2027 – François Villeroy de Galhau, governor of the Banque de France

31 December 2027 - Isabel Schnabel, member of the ECB Executive Board

14 December 2028 - Frank Elderson, member of the ECB Executive Board

31 December 2028 - Pierre Wunsch, governor of the National Bank of Belgium

10 April 2029 - Christodoulos Patsalides, governor of the Central Bank of Cyprus

31 October 2029 - Fabio Panetta, governor of the Banca d’Italia

12 July 2030 - Boris Vujčić, governor of the Croatian National Bank

23 September 2030 – José Luis Escrivá, governor of the Banco de España

31 December 2030 - Joachim Nagel, president of the German Bundesbank

31 October 2031 – Piero Cipollone, member of the ECB Executive Board