Ortiz vs. Calderón

The president and the head of the central bank are often at loggerheads during times of economic distress, so this article about sniping between Felipe Calderón and Guillermo Ortiz is no shocker. Calderón wants Ortiz to lower interest rates so as to inject some money into the economy, provide easier credit for small businesses, and hopefully stimulate the labor market. Given that Calderón campaigned as the "jobs president," that's an important goal (especially with mid-term elections looming next summer), but it's not the only one.

Ortiz is right when he says that with inflation in Mexico on the rise, lowering interest rates right now would be dangerous. The president's point that the United States has lower rates and comparable inflation is really irrelevant, given the vast differences between the two economies. Calderón and Mexico, unfortunately, are going to have to suffer through a dry economic spell without manipulating monetary policy to alleviate things. Fifteen years ago, a Mexican president would have bullied the bank into lowering the rates, and would likely have contributed to a future catastrophe. For all the focus on political opening, modernizing the central bank --independence was written into the constitution in 1994, and the bank has gained international respect during the decade of Guillermo Ortiz's leadership-- has been just as important to the nation's democratic transition.