UPDATE 2-Most Mexico central bankers see inflation spike fading -minutes
(Recasts with outlook for monetary policy, adds market reaction)
By Michael O'Boyle and Alexandra Alper
MEXICO CITY, Sept 19 (Reuters) - Mexico's central bankers think that a recent spike in inflation will fade by early next year even as the economy picks up speed, minutes showed on Friday, suggesting that interest rates will remain steady into next year.
Central Bank board members voted 5-0 at their Sept. 5 meeting to hold their benchmark rate at a record low of 3 percent.
The majority of policymakers thought that a recent rise in inflation above the central bank's 4 percent ceiling would "quickly" cool, slowing to around the bank's 3 percent target in the first half of next year.
Most policymakers also thought that the outlook for the economy was improving, as exports picked up after a weak start to the year, but the majority thought that slack in the economy would contain price pressures in the near future.
Yields on Mexican interest rate swaps were little changed after the minutes as investors stuck to bets of a 25 basis point rate hike by April next year.
The prevailing view among economists is the central bank will wait to raise borrowing costs until the U.S. Federal Reserve starts tightening monetary policy, according to Reuters surveys.
The Fed is expected to start raising interest rates in the second quarter of next year, according to a Reuters poll last week. Continuación...