Mexico central bank seen brushing off price spike, holding rate
MEXICO CITY Oct 31 (Reuters) - Mexico's central bank is expected to hold its benchmark interest rate steady later on Friday and argue that a recent spike in inflation will fade next year.
Fifteen analysts surveyed by Reuters expect the central bank to hold its main interest rate at 3.00 percent while a recent dip in the economy pushed one analyst to predict a 25 basis point cut.
The central bank will issue its policy statement at 9:00 local time.
Mexican inflation hit a nine-month high of 4.32 percent in early October, above the bank's 4 percent ceiling, but policymakers expect inflation to fall toward their 3 percent target next year.
Most analysts forecast that policymakers will want to leave borrowing costs at a record low to support the economy, which has been weaker than expected.
"Inflation is going to improve, so that means there's no point in hiking and while the economy is getting better, growth is not going to be spectacular next year," said Alexis Milo, an economist at Deutsche Bank in Mexico City.
Central bank chief Agustin Carstens said last Sunday that a slower pace of government-controlled gasoline price increases expected next year and the fading effects of tax hikes from this year would help inflation cool near 3 percent by mid-2015.
Some economists are skeptical of the bank's forecast, citing talk of a minimum wage hike that could cause a chain reaction of higher consumer prices.
Policymakers held their benchmark rate steady at July and September meetings after catching markets off guard with a 50 basis points cut in June to aid a sluggish economy. Continuación...