UPDATE 1-Mexico's Carstens sees inflation below 4 pct for rest of year

miércoles 26 de marzo de 2014 16:24 GYT

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MEXICO CITY, March 26 (Reuters) - Mexico's Central Bank Governor Agustin Carstens said on Wednesday he expected inflation to remain below, or just around, 4 percent for the rest of the year before falling towards 3 percent early next year.

Mexican annual inflation in early March cooled more than expected to below 4 percent, the central bank's upper limit. The data released on Monday backed bets that policymakers will leave interest rates on hold this year.

Mexico's central bank targets a 3 percent inflation rate, with up to 4 percent considered acceptable.

"We expect that inflation will stay below four percent for the rest of the year, maybe fluctuating around that level but converging more clearly at the start of next year," Carstens said.

He said that the data from early March was a good sign that a jump in inflation, due mostly to new taxes on soft drinks and junk food, was not spurring wider price pressures.

The central bank kept its benchmark interest rate on hold at 3.50 percent on Friday, pointing to slack in the economy while noting the spike in inflation had eased. (Reporting by Alexandra Alper Writing by Christine Murray and Michael O'Boyle; Editing by Simon Gardner and James Dalgleish)