On 24 November Mexico’s President Andrés Manuel López Obrador announced that he will nominate Victoria Rodríguez Ceja, a deputy finance minister, to be the next president of Mexico’s central bank (Banxico).
Analysis:
Rodríguez’s nomination was unexpected, and markets instantly recoiled amid uncertainty over Mexico's monetary policy at a time when inflation is at its highest level in 20 years. With Rodríguez lacking significant experience in monetary policy, the concern is that she could bend to López Obrador’s will and jeopardise Mexico’s economic recovery from the coronavirus (Covid-19) pandemic.
- Rodríguez, who is currently undersecretary for expenditures at the finance ministry (SHCP), is not widely known. She has previously held several financial positions in the Mexico City (CDMX) government.
- Her nomination comes after the candidate formerly backed by President López Obrador to become the next Banxico president, Arturo Herrera, announced on 23 November that he was no longer being considered for the role.
- López Obrador offered little explanation for Rodríguez’s nomination, but said that she “acted with great responsibility in the management of public investments” and that there is a need to improve gender equity in Mexico’s institutions (Rodríguez would be the first female president of Banxico).
- However, doubts have been raised regarding her experience. Jacobo Rodríguez, director of economic analysis at US-headquartered hedge fund BW Capital, said yesterday that whilst she has “ample experience in public finances,” she “is not experienced in monetary policy, which is generating certain doubts as to whether she can maintain the country’s orthodox and prudent monetary policy.”
- Omotunde Lawal, the head of emerging markets at the international investment manager Barings, expressed concerns over Rodríguez’s independence, warning that “people are worried that this is a roundabout way for [López Obrador] to interfere with the central bank.”
- Reflecting these concerns, the Mexican peso plummeted in relation to the US dollar yesterday, weakening by 1.8% to trade at M$21.6/US$1.
- Rodríguez yesterday pledged to tame inflation, respect the central bank’s independence, and to leave Mexico’s international reserves untouched.
Looking Ahead: Rodríguez’s appointment will require the approval of a majority of the senate, which is dominated by the ruling Movimiento Regeneración Nacional (Morena).