Mexico’s next central bank governor is in doubt

On Tuesday, after Senate Majority Leader Ricardo Monreal stated that the name of the leading candidate had been withdrawn, the leadership of the Bank of Mexico fell into chaos, triggering uncertainty in monetary policy during a period of high inflation. .

Former Minister of Finance Arturo Herrera under the leadership of President Andrés Manuel López Obrador JuneHe is expected to take office in January, awaiting confirmation by the Senate.

Monreal said that the government had withdrawn his nomination in August, but did not explain why, adding that Herrera might still be nominated again.

Herrera later confirmed on Twitter that the president told him that he had decided to reconsider his appointment, but did not provide more details.

Since the news broke, the President’s Office has not immediately responded to a request for comment, nor has it issued a public statement on the topic.

Investors have always believed that Herrera has a close relationship with the president, but analysts said Tuesday’s news has raised more concerns about the economy. “There is a lot of uncertainty, a lot of noise,” said Adrián de la Garza, chief economist at Citi Mexico.

De la Garza said that if Herrera is not in the race, several names may be nominated, including Raquel Buenrosto, head of the tax agency SAT, Gabriel Yorio, deputy finance minister, and other board members of the bank. He believes that any replacement for Herrera may be someone with relevant experience.

“This may have an impact on the market in the short term, but ultimately the uncertainty should dissipate.”

In December of last year, the ruling party tried to pass a bill to force the Bank of Mexico to buy U.S. dollars that the bank could not repatriate, which sparked strong protests. Rating agencies said that this idea is bad for sovereign credit, and the bank itself strongly opposes it. The plan was later shelved.

The news was also released a few hours after the government issued a fast track order big project And is discussing a thorough reform of the energy sector. Critics of Lopez Obrador say these actions threaten the rule of law and independent institutions.

As inflation climbed, the central bank raised interest rates for the fourth consecutive time with a 4-1 vote at the meeting in early November. The market believes Herrera is more dovish than the current governor Alejandro Diaz de Leon.

Mexico’s economy suddenly Sign up In the third quarter, preliminary data showed that global chip shortages hit the auto industry, and labor reforms dragged down growth.

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