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In an unprecedented event, President López, in the morning of last Thursday, announced the decision that the Board of Governors of the Bank of Mexico had taken to increase the overnight funding rate by 50 basis points to place it at 6.5%, being that this announcement is exclusive power of the central bank. Later the president pointed out that he thought the Bank had already made his decision public and offered an “apology” to the governor and deputy governors, reaffirming in the process his respect for the autonomy of the central institute. Later he revealed that it was the Secretary of the Treasury who informed him of the decision of the Governing Board.

There are several points worth commenting on this event, by far an “unfortunate” event as some have described it.

First, there is the fact that it was the Secretary of the Treasury who informed the president. This official, together with the sub-secretary of the branch, attend as guests the governing meetings of Banco de México. They can participate in these meetings where they have a voice, but not a vote and, as established in article 45 of the Bank of Mexico law: “Those who attend the sessions must maintain confidentiality regarding the matters discussed in them, unless authorized expressed by the Governing Board to make any communication”. Several questions arise. Did the secretary have the authorization to inform the president? If he did not have the authorization and broke the law, what is the penalty? Should he resign himself? Is it common practice for the secretary to inform the president of what is agreed at the meetings or is this the first time this has happened? If the secretary knows that the official report on monetary policy decisions is the exclusive power of the Bank of Mexico and also knows that the “president’s chest is not a warehouse,” why did he tell him?

Second, was it a simple carelessness of the president? We know that he does not give way without a huarache and although he affirms that he is respectful of the autonomy of the Bank of Mexico, this is not the first time that he has had a dispute with the central bank, as when he claimed that the remnants were not delivered in advance. of operation being that the law expressly prohibits it or when it did not see a major problem for the Bank to acquire the dollars in cash held by a commercial bank. The president would really like the central bank not to be autonomous in order to be able to directly influence monetary policy decisions, particularly with regard to the primary financing of the central bank to the government and the use of international reserves, even more so when during the next three years there will be a significant deterioration of public finances that will force the government to reduce its spending and/or increase the flow of debt.

Third, confidence in the central bank. In managing monetary policy, one of the central elements is the credibility of the actions taken by the bank to achieve its objectives. The central bank must have an efficient and transparent communication policy regarding the decisions it makes, highlighting the explanation of why the decision was made, what is the objective sought, what are the transmission mechanisms of the decision made and who and How did they participate in the decision? This communication policy is essential to be able to influence the formation of inflation expectations and thus contribute to achieving the desired objective. The indiscretion of the Secretary of the Treasury damages the Bank’s communication policy and may undermine credibility and trust; what he and the president did is unacceptable.

Finally, in the midst of the scandal, the statement made by the president went unnoticed when he said that “when interest rates rise, there is less investment and inflation is supposed to fall; It is a control mechanism. We already know who he will blame when private investment does not pick up, no matter that the main reason is the mistrust that he himself generates.

Twitter: @econoclasta