November 22, 2017 / 10:04 PM / a year ago

UPDATE 1-Mexico central banker Carstens does not rule out interim governor

(Rewrites throughout after central bank chief’s comments)

By Anthony Esposito

MEXICO CITY, Nov 22 (Reuters) - Mexican central bank chief Agustin Carstens on Wednesday left open the possibility that an interim governor would be named after he steps down at the end of the month, if President Enrique Pena Nieto has not named a successor by then.

During his final public appearance as bank governor, Carstens introduced 10-year veteran Roberto Del Cueto, who, as the bank’s longest serving board member, would automatically step into Carsten’s role if no successor is named.

“I hope that everything is in place by the time I begin working in the Bank of International Settlements,” Carstens said, referring to his forthcoming position as head of the Basel-based bank.

Del Cueto said he did not anticipate the central bank would change its approach to policy if an interim governor is named after Carstens’ departure.

Carstens announced last December that he planned to step down, but later agreed to remain another five months as Mexico weathered uncertainty caused by Donald Trump taking over the U.S. presidency.

Electoral politics have complicated the question of Carstens’ succession as Mexican parties groom potential presidential candidates ahead of July’s election.

The new governor must be nominated by Pena Nieto, but stalling a decision is the fact that one leading candidate, Finance Minister Jose Antonio Meade, is also on the shortlist to be the 2018 presidential contender for the ruling Institutional Revolutionary Party (PRI), party officials say.

Amid that uncertainty, the central bank on Wednesday revised down its 2017 economic growth forecast, blaming unresolved North American trade talks, the impact of storms and two major earthquakes in September, as well as a drop in oil production to the lowest level in more than 20 years.

In its report, the central bank said the economy would grow between 1.8 and 2.3 percent in 2017, down from the 2.0 to 2.5 percent forecast in the prior quarterly report.

For 2018, the central bank predicted growth of between 2 and 3 percent, unchanged from the previous forecast.

Given uncertainty surrounding the North American Free Trade Agreement (NAFTA), which concluded a fifth round of talks in Mexico City on Tuesday, Carstens said that if talks collapsed the central bank should be prepared to ensure any peso depreciation happens in an orderly fashion. He did not elaborate.

He also said the central bank and the government should coordinate fiscal policy to help manage a real exchange rate adjustment that could result from the collapse of NAFTA.

The quarterly report said inflation will show a moderate downward movement at the end of this year and will fall faster next year.

Still, Carstens said it was worrisome that inflation remains above 6 percent, double the bank’s goal of 3 percent.

$1 = 18.6600 Mexican pesos Writing by Daina Beth Solomon; Editing by Frank Jack Daniel and Sandra Maler

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