FILE PHOTO: The logo of Mexico's Central Bank (Banco de Mexico) is seen at its building in downtown Mexico City
FILE PHOTO: The logo of Mexico’s Central Bank (Banco de Mexico) is seen at its building in downtown Mexico City, Mexico February 28, 2019. REUTERS/Daniel Becerril/File Photo

December 7, 2020

MEXICO CITY (Reuters) -Mexican finance ministry official Galia Borja is poised to become the central bank’s new deputy governor after the president nominated her on Monday to replace one of the most hawkish members on the monetary authority’s board.

If approved by the Senate to an eight-year term, President Andres Manuel Lopez Obrador’s nomination would give his three picks to date a majority on the bank’s five-member governing body.

Borja currently serves as treasurer of the finance ministry and is seen as a close ally of Finance Minister Arturo Herrera.

She is set to replace outgoing Javier Guzman, known as one of the relative hawks on the central bank board who took a more cautious approach to cutting its main lending rate.

While Borja lacks a public record on interest rates or other hot-button financial topics, the fact that she will replace Guzman has prompted some analysts to view her nomination as boosting the bank’s willingness to lower rates.

Borja could “tilt the balance of views away from the recent conservative majority towards a more neutral/dovish balance,” Goldman Sachs wrote in a note after the pick was announced.

Known locally as Banxico, the central bank has a constitutional mandate to ensure the “purchasing power stability” of Mexico’s peso currency.

By choosing Borja, Lopez Obrador is making good on a pledge to pick a woman for the monetary authority’s board. Irene Espinosa is currently Banxico’s only female board member.

Last month, Banxico hawks appeared dominant as they defied expectations and held borrowing costs steady for the first time in nearly 1-1/2 years.

The next monetary policy meeting is due on Dec. 17, but it is unlikely that Borja will be confirmed to her post by then.

Given the strength of Lopez Obrador’s Morena party and? its allies in the Senate, her nomination is expected to be approved.

(Reporting by David Alire GarciaEditing by Dave Graham and Mark Heinrich)

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