MEXICO CITY – President Enrique Peña Nieto on Tuesday appointed Alejandro Díaz de León, a U.S.-educated technocrat with more than 25 years in public service, as the next Bank of Mexico chief.
Continue Reading Below
Mr. Díaz de León, now a central bank deputy governor, will succeed Agustín Carstens, who is leaving this week to become the head of the Bank for International Settlements in Switzerland.
The decision will leave the central bank board with four voting members until a replacement deputy governor is nominated to the Senate, something Mr. Peña Nieto is expected to do in early 2018, according to several senators.
Miguel Messmacher, a deputy finance minister, is seen as a likely candidate for the deputy governor position, a top government official said.
Mr. Díaz de León's appointment means continuity of the policies that have made the bank one of the most orthodox central banks across Latin America. Mr. Díaz de León has been a vocal defender of the bank's autonomy and its single mandate of maintaining the purchasing power of the peso through low and stable inflation.
His term will begin Dec. 1 and run through December 2021, when Mr. Carstens's term was scheduled to end.
Continue Reading Below
Mr. Díaz de León has been deputy governor for less than a year, but knows the central bank's inner workings. He started his career as an analyst at the central bank in 1991, and worked there for 16 years. He is close to Mr. Carstens, who was his colleague in the 1990s when Mr. Carstens was head of economic analysis at the bank. Mr. Carstens has said he considers himself a mentor to Mr. Díaz de León.
"He is a very capable man, technically speaking, and knows the bank inside out," said Juan Carlos Moreno-Brid, an economy professor at the National Autonomous University of Mexico. "The fact that he has experience both in the central bank and the Finance Ministry could help to improve the coordination between monetary and fiscal policies."
Mr. Díaz de León is also well connected with two powerful politicians of Mr. Peña Nieto's administration: former Finance Minister José Antonio Meade, who is tipped to be the ruling party's candidate in next year's election, and Foreign Minister Luis Videgaray. The three men studied economics together at the Autonomous Technological Institute of Mexico, or ITAM -- a top private university where many Mexican government officials studied.
He is also well connected with two powerful politicians of Mr. Peña Nieto's administration: former finance minister José Antonio Meade, who is tipped to be the ruling party's candidate in next year's election, and foreign minister Luis Videgaray. The three men studied economics together at the Autonomous Technological Institute of Mexico, or ITAM -- a top private university where many Mexican government officials studied.
Mr. Díaz de León faces a difficult landing at the helm of the central bank. After a year and a half below the central bank's 3% target, inflation picked up this year and is currently at 6.6%, leading many investors to believe the bank could raise borrowing costs again soon. After a cycle of increases that lifted the overnight interest rate to 7%, the central bank has been on hold since June.
Also, the peso faces high volatility amid a tumultuous renegotiation of the North American Free Trade Agreement with the U.S. and Canada. The Mexican currency hit an all-time low against the U.S. dollar in early 2017, making imports more expensive and having an impact on inflation.
The bank unanimously voted to keep rates unchanged in early November, but one member warned that the current interest-rate level may not be enough to bring inflation back to the target.
Mr. Díaz de León, born in Mexico City on Dec. 1, 1969, will be the fourth Bank of Mexico governor since the central bank gained autonomy from the Mexican government in 1994 -- following Miguel Mancera, Guillermo Ortiz and Mr. Carstens.
After studying economics at the ITAM, he earned a master's degree in public and private administration from Yale University.
In 2007, Mr. Díaz de León was the director of Mexico's pension fund for state workers. From 2011 to 2015, he was in charge of public credit at the Finance Ministry under both Messrs. Meade and Videgaray, managing Mexico's public debt.
He then headed the export development bank Bancomext before being appointed to the central bank board in 2017.
Write to Juan Montes at firstname.lastname@example.org
(END) Dow Jones Newswires
November 28, 2017 18:54 ET (23:54 GMT)