UPDATE 1-Mexico's Carstens grilled by Senate panel
(Adds Carstens comments, details throughout)
MEXICO CITY Dec 14 (Reuters) - The man tapped to lead Mexico's central bank is advocating that the bank remain independent and says it should communicate more freely as it mulls future interest rate policy.
Former Finance Minister Agustin Carstens said on Monday that the interest rate-setting body should also seek to incorporate lessons from the global financial crisis into its future policymaking.
"The Bank of Mexico needs to continue and deepen the process of communication with the federal government, the legislature and especially the public," Carstens told senators who will vote on ratifying his nomination as central bank chief.
Carstens was questioned on Monday evening by a Senate panel as lawmakers probed how close he would be to the government and whether he favors spurring growth over fighting inflation.
"The Bank of Mexico today enjoys highly recognized credibility," Carstens said. "If my nomination is approved I promise to continue in that way."
Analysts are keen to know whether, if nominated, Carstens could bring Mexico in line with central banks in Brazil and Colombia in publishing the minutes of policy reviews.
The Senate finance committee and then the full upper house are due to vote this week on confirming Carstens' nomination.
Carstens was finance minister until last week, when President Felipe Calderon picked him to head the bank.
His perceived ties to Calderon, who criticized departing central bank chief Guillermo Ortiz last year on his interest rate policy, have raised questions that Carstens' appointment could threaten the bank's independence.
"He will surely face these sorts of questions," said Sen. Jose Trejo, a member of Calderon's conservative party, ahead of Monday's hearing.
Carstens signaled last week after being nominated that he is not overly concerned about inflation at the moment, leading investors to raise bets the central bank will postpone interest rate hikes expected next year. [ID:nN10191991] [ID:nN10209811]
Mexico's economy is emerging from a deep recession that has cooled inflation to its lowest in nearly two years, but price rises will likely accelerate next year due to tax increases.
If approved as expected, Carstens' key challenge next year would be to keep inflation in check without choking growth.
While Ortiz was hailed for lowering inflation and modernizing interest rate policy, some investors would have liked to see more of the bank's inner discussions.
Carstens has already shown frankness when talking about interest rate levels. On Thursday, he said rates would likely stay around current levels for a relatively long time.
"I think he is going to be more communicative and it is even possible that we could see the publication of the central bank's minutes," said JP Morgan economist Gabriel Casillas.
Carstens, an economist trained at University of Chicago, is widely respected on Wall Street. He was deputy managing director at the International Monetary Fund before becoming finance minister and spent much of his early career at the central bank, rising to the post of chief economist.
"It is sufficiently clear that he is a man trained to do a good job at the central bank," said Manlio Beltrones, Senate leader of the opposition Institutional Revolutionary Party. (Additional reporting by Patrick Rucker and Michael O'Boyle; Editing by Gary Hill)
- Ukraine seeks to join NATO; defiant Putin compares Kiev to Nazis |
- California passes 'yes-means-yes' campus sexual assault bill
- In town halls, U.S. lawmakers hear voter anger over illegal migrants |
- IBM launches Watson system for research, hopes for breakthroughs
- Family of instructor killed at Arizona gun range does not blame girl