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Tuesday, November 30, 2021

Mexico’s next central bank governor in doubt

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bank was confused on Tuesday after Senate Majority Leader Ricardo Monreal said the name of the top candidate had been withdrawn, sparking uncertainty over monetary policy at a time of high inflation.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

On June. It was expected to start in January, pending Senate confirmation.

Monreal said the government had withdrawn his nomination in August, but had not explained why, adding that Herrera could still be renamed.

Herrera himself later confirmed on Twitter that the president had told him that 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 made a public statement on the matter since the news broke.

Investors had viewed Herrera as close to the president, but analysts said Tuesday’s news raised further concern about the economy. “There is a lot of uncertainty, a lot of noise,” said Adrián de la Garza, Citi’s chief economist for Mexico.

De la Garza said that several names were circulating as possible nominees, Herrera should be out of the race, including Raquel Buenrosto, director of the tax agency SAT, Gabriel Yorio, vice minister of Finance and other members of the bank’s board. He believes that any replacement for Herrera is likely to be someone with relevant experience.

“This could possibly have an impact on the markets in the very short term, but eventually the uncertainty should dissipate.”

In December of last year, the ruling party sparked a protest when it tried to pass a bill that forced the Bank of Mexico to buy dollars that the banks could not repatriate. The rating agencies said the idea was negative credit for the sovereign and the bank itself strongly rejected it. The plan was later shelved.

The news also came hours after the government issued a directive to speed up mega projects and amid discussions about a radical reform of the energy sector. Critics of López Obrador say the measures threaten the rule of law and independent institutions.

With inflation on the rise, the central bank raised rates for the fourth consecutive meeting in early November in a 4-1 split vote among members. Herrera is seen by the markets as more moderate than the current governor Alejandro Díaz de León.

Mexico’s economy suddenly hired In the third quarter, preliminary data showed, with the global chip shortage affecting the auto sector and labor reform dragging down growth.

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