November 30, 2018 / 8:34 AM / 7 months ago

Lopez Obrador's central bank pick says Mexican president-elect spooked markets

MEXICO CITY (Reuters) - A left-leaning economist tapped by Mexican President-elect Andres Manuel Lopez Obrador to serve as a central bank deputy governor said on Thursday that the incoming president had spooked markets when he canceled a $13 billion airport project.

FILE PHOTO: President-elect Andres Manuel Lopez Obrador talks about his security plan to the media, before he takes office as Mexican President on the December 1, in Mexico City, Mexico November 14, 2018. REUTERS/Henry Romero

The late October decision to pull the plug on the partially-built airport for Mexico City left investors fretting over how Lopez Obrador will manage the economy, leading to sharp falls in the peso and stockmarket..

Asked whether Lopez Obrador had done anything to make markets nervous, Gerardo Esquivel told local broadcaster Foro TV that the president-elect’s airport decision was one of the reasons behind economic uncertainty facing Mexico.

“There was one very important signal that went in that direction, but it was something that was announced during the campaign,” said Esquivel, the second appointment by Lopez Obrador to the bank’s five-member board, referring to the then-presidential candidate’s long-standing opposition to the airport project.

Esquivel was a spokesman on economic matters for Lopez Obrador’s campaign and he is also married to the president-elect’s choice for economy minister, Graciela Marquez.

His appointment to the central bank’s board was announced during a Monday news conference after Mexico’s benchmark stock index fell to its lowest in more than four years and the peso weakened.

Esquivel said in the interview he was selected, in part, to calm markets, and emphasized that the central bank’s independence from the executive branch is “very important.”

The Harvard-trained economist also shied away from endorsing a change in Mexican law that would add promoting economic growth to the bank’s existing mandate to keep inflation low.

“I don’t think that’s needed,” he said, even though in the past he has written that a duel objective for the central bank including both growth and inflation should be debated.

“I have been very critical, in fact, that it was a strict inflation target,” he added.

Asked how he would respond if Lopez Obrador or the incoming finance minister called him to ask for help from his new perch at the bank, he did not directly answer the question.

“What I’d say is that what there should be, more than anything else, is transparency, so that we know what each person’s position is,” said Esquivel.

He pointed out that anyone “who doubts the autonomy that I may have” will be able to review the votes of the bank’s board, where members names are disclosed.

Esquivel’s nomination must still be approved by the Senate, which is controlled by the president-elect’s MORENA party and its allies.

Lopez Obrador, who won a landslide election victory in July, takes office on Saturday.

(This story amends headline to clarify Lopez Obrador is president-elect, not yet president)

Reporting by David Alire Garcia and Noe Torres; Editing by Raissa Kasolowsky

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