Mexico’s next central bank governor in doubt

Mexico’s central bank leadership was confused on Tuesday after Senate Majority Leader Ricardo Monreal said the name of the leading candidate had been withdrawn, causing uncertainty over money policy. currency at a time of high inflation.

The choice of Arturo Herrera, the former finance minister under President Andrés Manuel López Obrador, was announced in June. He was expected to start in January, pending confirmation by the Senate.

Monreal said the government withdrew his nomination in August but it did not explain why, adding that Herrera could still be waived.

Herrera herself later confirmed on Twitter that the president had told him he had decided to reconsider his appointment without giving further details.

The president’s office did not immediately respond to a request for comment and has not issued a public statement on the subject since the news broke.

Herrera was once seen by investors as close to the president, but analysts said Tuesday’s news raised more concerns about the economy. “There is a lot of uncertainty, a lot of noise,” said Adrián de la Garza, chief economist for Mexico at Citi.

De la Garza said a number of names are being nominated as possible candidates, if Herrera does not run, including Raquel Buenrosto, head of the SAT tax agency, Gabriel Yorio, deputy finance minister and other members. other members of the board of directors of the bank. He thinks any Herrera replacement is likely someone with relevant experience.

“This could have an impact on the market in the short term, but eventually the uncertainty will dissipate.”

In December of last year, the ruling party caused a wave of protests when it tried to pass a bill that would force the Bank of Mexico to buy dollars that the banks could not repatriate. The rating agencies said the idea was a credit negative to the sovereign and the bank itself averted the difficulty. The plan was later shelved.

The news also came hours after the government published the directive to fast-track big project and amid discussions of a radical overhaul of the energy industry. Critics of López Obrador say the moves threaten the rule of law and independent institutions.

With inflation escalating, the central bank raised interest rates for the fourth consecutive meeting in early November in a 4-1 vote among members. Herrera is considered by the market to be more dovish than the current governor Alejandro Díaz de León.

The Mexican economy suddenly contract In the third quarter, preliminary data showed, with global chip shortages hitting the car sector and labor reform hitting growth.

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