UPDATE 2-Mexico holds key interest rate, sees inflation easing over longer term
(New throughout, adds central bank quote on inflation forecasts)
By Alexandra Alper
MEXICO CITY, Sept 5 (Reuters) - Mexico's central bank kept interest rates on hold on Friday, highlighting stronger economic growth and forecasting that inflation pressures would ease in the first half of 2015, boding for steady borrowing costs ahead.
The Banco de Mexico maintained its benchmark interest rate at a record low of 3 percent, as expected by analysts polled by Reuters, after policymakers surprised markets by delivering a 50 basis point cut in June.
Growth wobbled early this year, as a harsh U.S. winter hammered American demand for Mexican factory exports and a tax hike dragged on consumer spending.
But data last month showed second-quarter growth beat expectations thanks to a pick up in industrial activity and domestic demand, bolstering bets that economic expansion could reach the finance ministry's 2.7 percent growth forecast for 2014.
Policymakers said stronger external demand and a slight recovery in domestic spending fueled the pick-up, but said slack in the economy would keep stronger growth from fanning price pressures.
Owing to short-term pressures like cattle prices, annual inflation would likely take longer than earlier forecast to cool toward the bank's target of 3 percent a year, according to the bank.
"It is expected that inflation will close 2014 at around 4 percent," the bank's board said in a statement on Friday. "There will be a significant decrease (in inflation) at the beginning of 2015, and it will near the 3 percent level during the first half of the year and close 2015 around that level." Continuación...