Lagarde to step down early as ECB head

Good morning and welcome back. In today’s newsletter:

• Christine Lagarde to leave ECB before the end of her 8-year term

• JPMorgan’s push to open 160 new branches in 30 states

• Maga’s revolt over Trump’s AI push

• And the return of 90s style icon the pashmina

We begin with an exclusive story on the succession at the European Central Bank.

Here’s what we know: Christine Lagarde is expected to leave the ECB before her eight-year term as president expires in October 2027, according to a person familiar with her thinking.

Europe’s top central banker, who joined the Frankfurt-based ECB in November 2019 from the IMF, wants to exit before the French presidential election in April next year.

According to the person with knowledge of her thinking, Lagarde wants to give French President Emmanuel Macron and German Chancellor Friedrich Merz time to find a new head for one of the EU’s most important institutions. It is unclear when Lagarde will leave.

Why it matters: People briefed on discussions in Paris have told the FT that Macron has for months wanted to have a say in choosing Lagarde’s successor. The French presidential election in April next year will be crucial for the Eurozone’s second-largest economy and the wider EU.

Lagarde’s time at the ECB’s helm has been shaped by a series of crises, including the Covid-19 pandemic, Russia’s full-scale invasion of Ukraine and a trade conflict with the US. Read the full story.

Here’s what else we’re keeping tabs on today:

• Federal Reserve: The Federal Open Market Committee issues minutes from its January 27-28 meeting amid signs the US economy is turning. Separately, Federal Reserve vice-chair for supervision Michelle Bowman is expected to participate in an event in Washington.

• Economic data: The commerce department’s Census Bureau is expected to release the durable goods data and December’s building permits data.

• Results: Verisk, Omnicom, DoorDash, Texas Pacific Land Corp, Molson Coors and CRH publish fourth-quarter earnings.

• Mark Zuckerberg: The Meta CEO is scheduled to testify before a Los Angeles court as the billionaire social media chief seeks to fend off a landmark legal claim that social media is addictive to children.

• Trilateral meeting: Delegations from Ukraine, Russia and the US continue with talks in Geneva to end the war.

How should you navigate global economic risks this year? Join us tomorrow for a live Ask an Expert Q&A with Chris Giles, the FT’s economics commentator. Post your question here.

Five more top stories

1. Exclusive: JPMorgan Chase aims to open more than 160 branches in more than 30 states in 2026 as part of a multibillion-dollar investment into its brick-and-mortar network that reflects a broader bet by US banks on Americans’ enduring fondness for in-person banking.

2. Peru’s Congress has removed interim president José Jerí after four months in office. Jerí, who ascended to office after lawmakers removed Dina Boluarte in October, has become embroiled in a scandal after details emerged about meetings with Zhihua Yang, a Chinese businessman.

3. Warner Bros Discovery has reopened sale talks with Paramount, giving the media group seven days to make its “best and final” bid to top Netflix’s agreed $83bn takeover or step aside. A person close to the situation called it a “put up or shut up” moment for Paramount.

4. David Silver, one of Britain’s top AI researchers, is raising $1bn for a new company aiming to build “superhuman intelligence” in a deal led by Sequoia Capital that would be the largest seed round ever in Europe. Read more on the London-based AI start-up Ineffable Intelligence.

5. China’s push to foster medical technology champions to rival US groups such as Elon Musk’s Neuralink is beginning to show results, with one Shanghai brain implant start-up moving to human trials. Here’s more on Beijing’s political support for groups such as NeuroXess.

Today’s big read

Over the past year, the White House has courted tech billionaires and gone out of its way to protect the AI industry’s agenda even though poll after poll has shown Republican voters are concerned about the construction of data centres and the lack of legislation governing the technology’s development and implementation. Across the US, citizens, clergy and elected officials in conservative communities are leading a grassroots rebellion against the rapid rollout of AI, threatening to make it a defining issue of the 2028 presidential race.

We’re also reading . . . 

• Gavin Newsom: The Californian governor is the nearest thing America has to a leader of the opposition, writes Edward Luce. But it is unclear what he stands for.

• US brain drain: Policy decisions grounded in Maga talking points are helping to fuel a PhD exodus from government, eroding the country’s scientific edge, writes Anjana Ahuja.

• Population decline: Arguments about the dangers of falling fertility deserve much closer scrutiny, writes Martin Wolf.

• Cuba: The country’s private sector is thriving as a two-tier economy takes root in a once-egalitarian society. Michael Stott reports from Havana.

Chart of the day

Fed balance sheet expansions have been a go-to policy response to major upheavals for more than a century, writes Toby Nangle, including the first world war, the Great Depression, the second world war, the global financial crisis and Covid-19, as this chart shows. It documents the history of the US central bank’s balance sheet since its inception in 1914.

Take a break from the news . . . 

The pashmina is back! The cashmere shawl had its heyday in the ’90s when it was elevated to It-girl-staple status by the likes of Gwyneth, Nicole and Marie-Chantal of Greece. Now it’s back finding favour with a younger cohort of A-listers and influencers, and being deployed in imaginative ways.