President Andres Manuel Lopez Obrador blindsided most onlookers Wednesday by saying he had reconsidered his decision to nominate former finance minister Arturo Herrera to head the central bank. Instead, he put forward Victoria Rodriguez Ceja, a little-known public spending chief with a long career in government finance jobs but little experience or academic background in monetary policy.
The markets took umbrage, knocking down the peso as much as 1.8% right after the surprise announcement and making it the worst-performing emerging market currency in the past five days apart from Turkey, where President Recep Tayyip Erdogan has declared “an economic war of independence” against higher interest rates, forcing the hand of the central bank.
Analysts worried aloud that by helming the bank with Rodriguez, Lopez Obrador might be also taking a grab at the independence of one of the few Mexican institutions that has remained isolated from his controlling political clout.
“We’re in a pessimistic situation,” said Gabriela Siller, director of economic analysis at Banco BASE. “One fears a possible Erdoganization of monetary policy in Mexico.”
AMLO, as the president is commonly known, promptly dismissed such fears, saying twice that he won’t meddle with Banxico’s independence. Instead, he argued that he wanted to promote a woman who has been central to carrying out his sweeping austerity. In a statement to Bloomberg News, presidential spokesman Jesus Ramirez said the government will respect the central bank’s autonomy and “doesn’t plan to change its mandate or structure.”