The governor of the Bank of Mexico has spoken out about the need to protect the bank’s actions in the face of political turmoil from President Andrés Manuel López Obrador and his party.
The bank’s autonomy was recently questioned when López Obrador fired his successor and replaced him with a lesser-known financial expert.
The outgoing governor, Alejandro Díaz de León, said he was confident the bank would continue to meet its requirements as long as its rules were not in place.
“The most important thing is to keep the law and the law that the bank has today,” Díaz de León told the Financial Times in an interview. “I think this is a very good guarantee that a stable environment with a reduction in value prices can be maintained.”
Victoria Rodríguez Ceja has taken office since January 1 as the first female banker in the bank, leading a group of women.
Tensions between the central bank and politicians have escalated last year when a bill by members of the ruling Morena party sought to force them to buy more money. The request would have been counterproductive banking rights, critics said. It was later abolished after fierce opposition.
The central bank has also been embroiled in a series of political disputes this year back against López Obrador’s attempt to use the Mexican section of a global liquidity injections from the IMF to pay off government debt.
Going back and forth with the president and his party was part of the democratic process, said Díaz de León.
Central banks are at the forefront of global pressure to reduce inflation, and last week many of them boldly tightened the policy. Policy makers face a “major challenge in managing finance”, said Díaz de León. “It is obvious that central banks are able to perform their functions independently and it is important that they are maintained.”
Bank of Mexico has faced difficulties in managing the country’s instability due to the economic crisis of the coronavirus. A sudden decline in the third quarter of this year will force its five-member committee not to delay the recovery by raising prices so quickly.
However Mexico is facing rising inflation, leaving them with a problem. Price growth has skyrocketed in 20 years, forcing the bank amazing markets by raising prices significantly at their summit earlier this month.
Despite this, Díaz de León cautioned that Mexico is not just looking forward to the future.
“Sometimes it seems like there are two songs, song 25 [percentage point rate rises] and method 50.. . We don’t see the truth in the bank, ”he said. “Going forward all the options are available and nothing has been predetermined.”
Mexico has been hit by the outflow of foreign currency in the economy and public security since the outbreak began, another factor that could force banks to raise prices in order to attract foreign exchange.
However, Díaz de León reduced the economic downturn. “The changes are controlled and slow,” he said. “We hope that as the risk increases, the interest in local financial instruments will return.”
After taking power in December 2018, López Obrador established a major strategic plan that he worked for. during the plague. The International Monetary Fund (IMF), which had previously called for stricter spending, has called on the government to step up its efforts. his money addressing Covid’s financial crisis.
Bank of Mexico lost its employees in the early months of López Obrador’s management, especially after a law was passed banning it. government pay. Social change has been stable since then, Díaz de León said.
