The President of Mexico nominated an unknown public sector economist to serve as governor of the country’s central bank on Wednesday, which disturbed financial markets and caused the peso to fall to its lowest level since March.
A day ago, President Andres Manuel López Obrador unexpectedly announced Withdrew his previous nominee Arturo Herrera (Arturo Herrera)-investors are more familiar with the former Minister of Finance.
At his morning press conference, López Obrador hardly explained why he changed his mind, but tried to calm people’s concerns that he wanted to intervene in bank policymaking.
“We have proven with facts that we respect the autonomy of the Bank of Mexico,” he told reporters. “The government and the Ministry of Finance did not interfere with the decision of the Bank of Mexico.”
The Mexican peso weakened sharply after the announcement, falling 1.8% against the U.S. dollar and falling to 21.6 against the reserve currency. According to Bloomberg data, the decline in the peso made the peso the worst-performing emerging market currency on Friday.
Victoria Rodríguez Ceja was in charge of managing federal government spending during the period of significant austerity cuts Monetary policy experience But he is a long-term public finance official at the state and federal levels.
The reduction of public expenditure is an important creed of the López Obrador government, which he believes is closely related to the fight against the epidemic. corruption.
“The market is very cautious because we don’t know [Rodríguez Ceja’s] Gabriela Siller, director of financial and economic research at Banco Base, expressed her stance on inflation, especially her views on whether inflation is temporary. “Her name is not being talked about as a possible candidate.”
If the Senate confirms as expected, Rodríguez Ceja will become the first woman in charge of the central bank.Her appointment also means most The bank’s five presidents will be women.
As the country’s inflation soars—a phenomenon that tests policymakers around the world, the nomination comes at a challenging time for the central bank. New data released by the Mexican statistical agency INEGI on Wednesday showed that the inflation rate in the first half of November rose by 7.05% from the same period last year, the largest increase in 20 years.
In order to curb inflation, the Bank of Mexico has raised interest rates at four consecutive meetings in the past.
The market believes that the former candidate, Herrera, is more dovish than the outgoing governor Alejandro Díaz de León. Although Rodríguez Seha’s views are little known, the last rate hike was conducted with a 4-1 vote, which means that her vote may not push the policy in a new direction in the short term.
The unexpected change in the nominee happened the same week as the president issued the directive Fast track large projects, The move expressed by the opposition and lawyers is unconstitutional, and the oath will bring legal challenges.