(Reuters) - Jonathan Heath, an economist and self-proclaimed outsider whom Mexico’s President-elect Andres Manuel Lopez Obrador has tapped as a future deputy governor at the Bank of Mexico, said on Friday that he has a “balanced” view on monetary policy.
Earlier on Friday, incoming Finance Minister Carlos Urzua said that Lopez Obrador will propose Heath as a deputy governor of the Bank of Mexico starting in 2019.
Heath, a well-known private economist who was previously chief economist for HSBC bank in Mexico, is set to replace board member Manuel Ramos Francia whose term ends this year. The Senate, where Lopez Obrador’s party and its allies have a majority, must approve his nomination.
Leftist Lopez Obrador, who won a landslide victory earlier this year and will take office in December, is more nationalist than the current government, and his populist instincts stirred concerns that he could steer Mexico away from its orthodox economic policy in recent decades.
Heath, however, is widely respected by market watchers.
Asked if he was a hawk who prioritizes fighting inflation in monetary policy or a dove who tends to back policy that favors growth, Heath said, “I consider myself balanced, middle of the road.”
Heath told Reuters in an interview that he would provide a fresh perspective at the bank, where most appointees have risen from within the ranks of the institution.
“My perspective is of an outsider, not someone who grew in the Bank of Mexico,” said Heath, whose likely nomination was first reported by the Wall Street Journal earlier this week.
Mexico has had a long-standing debate over whether the central bank should focus on inflation or have a dual mandate like the U.S. Federal Reserve, which also seeks to promote growth.
Heath said he doubted Lopez Obrador would move to change the central bank’s mandate due to the president-elect’s pledge to support the central bank’s autonomy.
“Respecting autonomy means touching neither the corresponding articles of the constitution nor the organic law of the bank,” he said.
Heath said the debate over a dual mandate was “political noise.”
“The best way to maintain low interest rates is by having price stability,” Heath said. “The best contribution that monetary policy can make to a better economic performance is assuring economic stability.”
Heath warned against a sudden increase in wages as the new government seeks to address poverty and inequality.
A “gradual” rise “shouldn’t affect inflation. If it is to increase suddenly, it can be something more complicated,” he said.
Lopez Obrador has called for doubling the minimum wage in northern states that border the United States in a bid to reduce inequality with neighboring U.S. areas.
A commission made up of government, business and labor representatives will set next year’s minimum wage before the end of the year.
Gabriel Casillas, chief economist at Banorte bank, said he thought the choice of Heath showed the president-elect was serious about central bank autonomy.
“He has the academic credentials, the experience and a full market recognition to become a great board member,” Casillas said.
Heath created the first purchasing managers index for Mexico and has taught economics at several universities.
Reporting by Stefanie Eschenbacher and Michael O’Boyle; editing by Alistair Bell and Cynthia Osterman
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