Mexico’s Peña Nieto appoints new Banxico head
November 29, 2017
Development: On 28 November, Mexico’s President Enrique Peña Nieto appointed Alejandro Díaz de León Carrillo as the next governor of the central bank (Banxico).
Significance: Díaz is now poised to take over the leadership of Banxico for an initial four-year term from 1 December after the bank’s long-serving governor, Agustín Carstens, steps down on 30 November. The new Banxico president has some big shoes to fill as Carstens has managed Mexico’s domestic economy for the past decade and helped to successfully overcome some major crises. While Díaz’s appointment has been well-received, there are no doubts that he will face some significant challenges in maintaining Mexico’s macroeconomic stability at a time when the country continues to face economic uncertainty stemming from factors such as the renegotiation of the North American Free Trade Agreement (Nafta).
While it has been known since June that Carstens’s would leave Banxico this month to take over the post of director at the Bank for International Settlements (BIS), the name of his replacement has been unknown until now. There was a lot of speculation that President Peña Nieto was considering appointing his finance minister, José Antonio Meade Kuribreña, as Carstens’s replacement. However, Meade has announced his decision to step down from the cabinet in order to seek the presidential nomination of the ruling Partido Revovucionario Institucional (PRI) ahead of next year’s general election.
Meade’s announcement appears to have helped Peña Nieto to finally decide on who should take over the helm at Banxico. In appointing Díaz, Peña Nieto has once again opted for an individual with no known political affiliations with a highly technical profile. Díaz holds a bachelor’s degree from the Instituto Tecnológico Autónomo de México (Itam) university and a master’s in public administration from Yale University. He previously served in Banxico from 1991 to 2007 as an economist. He also served at the public credit unit of Mexico’s finance ministry (SHCP) in 2011-2015 and lately on the board of the national foreign trade bank (Bancomext).
However, Díaz does not have a lot of experience in setting monetary policy, having only been appointed to Banxico’s board in January this year. Nevertheless, his appointment has been welcomed by local economists who say that he is well-respected both inside Banxico and by the economics community. They also note that the fact that he is widely acquainted with Banxico’s organisational structure should put him in good stead.
Looking Ahead: Following his appointment, Díaz will have to have to decide whether Banxico needs to take new measures at its 14 December monetary policy meeting to try to contain the national inflation rate, which continues to run at around 6%, well above the Banxico target rate of 3%.
Latin American Newsletters (LatinNews) was founded in London in 1967 to provide expert political, economic, and security analysis on Latin America and the Caribbean. For nearly 50 years, it has been acknowledged as the foremost authority on the region.