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Finance Ministry Vs Central Bank

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by Felix Salmon
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Apr 30 2007 12:00am EDT

Finance Ministry vs Central Bank

Central bank independence is all well and good. But even if a finance minister has no control over his country's central bank whatsoever, it's still shocking to see him criticize the central bankers in public. Especially when the finance minister in question is Agustín Carstens, minister of economy in Mexico and former deputy managing director of the IMF.

Carstens has come out and said that Banxico's rate hike last week was premature – something which might well be true, but which is hardly going to reassure foreign investors that Mexico's fiscal-policy authorities are working hand-in-glove with its monetary-policy authorities.

Carstens is a very good economist, and a very powerful man, but he, like David Bonderman, might benefit from some PR coaching. Bob Rubin never criticized Alan Greenspan, and Hank Paulson would never criticize Ben Bernanke – not in public. This is exactly the same.

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