The outgoing governor of the Bank of Mexico has spoken about the importance of protecting the bank’s constitutional mandate, as the institution faces increasing demands from President Andrés Manuel López Obrador and his party. Political pressure.

Recently, when López Obrador withdrew his nomination for the next governor and was replaced by a lesser-known public sector economist, the bank’s autonomy was questioned.

The outgoing governor, Alejandro Díaz de León, said that as long as its legal framework remains the same, he is confident that the bank will continue to perform its duties.

In an interview with the Financial Times, Díaz de León said: “The key is to protect the constitutional authority and laws that banks have today.” “I think these are to maintain a stable and low-inflation environment. Best guarantee.”

Victoria Rodríguez Ceja will take over as the bank’s first female president from January 1, leading a female-majority board of directors.

Tensions between the central bank and politicians began to intensify when a bill proposed by the ruling Morena party’s lawmakers tried to force the central bank to buy excess dollars last year.The proposal will destroy Bank autonomy, The critic said. Eventually it was shelved under strong opposition.

The Central Bank Board of Directors is promoting this year Counterattack López Obrador tries to take advantage of Mexico’s share Global liquidity injection Repayment of public debt from the International Monetary Fund.

Diaz de Leon said that going back and forth with the president and his party is part of the normal functioning of democracy.

Central banks are at the forefront of global efforts to slow the rise in inflation, and last week Many of them are more active in tightening policies. Diaz De León said that policymakers face “critical situations in dealing with monetary policy.” “It is clear that the central bank can do its work better within an autonomous framework, and it is very important to maintain this.”

The Bank of Mexico faces a delicate balance in guiding the country to fragilely escape the economic impact of the coronavirus pandemic. The sudden output contraction in the third quarter of this year put pressure on its five-member board of directors not to raise interest rates too quickly to stifle the recovery.

However, Mexico faces rising inflation, which puts them in a dilemma.The rate of price growth hit a 20-year high, prompting banks to Surprise market Raised interest rates substantially at the meeting earlier this month.

Nevertheless, Díaz de León warned that Mexico does not necessarily aim to raise interest rates significantly in the future.

“Sometimes it looks like there are two tracks, 25 tracks [percentage point rate rises] And 50 trajectories. .. The fact is at the bank, we don’t think so,” he said. “Looking forward, all options are available, but none of them are predefined. “

Since the beginning of the pandemic, Mexico has experienced foreign capital outflows in stocks and government securities, which is another factor that may force the bank to raise interest rates to attract foreign capital.

However, Diaz De Leon played down the economic impact. “The adjustment is orderly and gradual,” he said. “We hope that as the risk subsides further, interest in local currency instruments may also reappear.”

After taking power in December 2018, López Obrador implemented his unwavering comprehensive austerity policy During the epidemic. The International Monetary Fund has been advocating for tightening spending rules in the past, urging the government to increase Its expenditure To deal with the economic impact of Covid.

The Bank of Mexico lost its employees in the first few months of López Obrador’s reign, especially after passing a restriction Wages in the public sectorDíaz de León said that since then, the rotation of the number of employees has stabilized.